Aug 17, 2007 10:15 am in Winnipeg
The Fed open market committee and the Fed"s board board met yesterday after the markets closed in a conference call and wisely decided to cut their discount window rate 50 basis points as well as permit 30 day renewable loans in order to inject further potential liquidity into the financial markets.
Both the New York and San Francisco district banks had called for the cut.The FOMC agreed.
This suggests that they have definitely got the message that inflation is not the risk but widespread financial trouble and recession is .
They acknowledged this in a statement that "financial markets have deteriorated and tighter credit and rising uncertainty have the potential to restrain economic growth" .
Despite substantial previous injections of cash a number of companies had experienced difficulty in raising funds because of the sub prime crisis.
This act signals the markets that the next overnight rate setting should involve a comparable or even larger cut in rates.
Good for you Mr.Bernanke for acting.
Over to you Mr. Dodge
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