WASHINGTON (AP) -- The Federal Reserve has slashed a key interest rate by half a percentage point as it seeks to revive an economy hit by a long list of maladies stemming from the most severe financial crisis in decades.
The central bank on Wednesday reduced its target for the federal funds rate, the interest banks charge on overnight loans, to 1 percent, a low last seen in 2003-2004. The funds rate has not been lower since 1958, when Dwight Eisenhower was president.
The cut marked the second half-point reduction in the funds rate this month. The Fed slashed the rate by that amount in a coordinated move with foreign central banks on Oct. 8.
The central bank said that "downside risks to growth remain" holding out the promise of further rate cuts if needed. The rate-cut decision was unanimous.
Federal Reserve Chairman Ben Bernanke and his colleagues pledged that they would "monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."
Many analysts said they believe the Fed will not stop at 1 percent if officials see the need to cut rates further. Some are forecasting another half-point move at the Fed's last meeting of the year on Dec. 16.
In its statement, the Fed indicated it had room to lower rates because the spreading economic weakness was lowering the risks that inflation would get out of control. Indeed, the weakness has caused dramatic declines in the price of oil and other commodities.
While many economists believe the country has already fallen into a recession, they think the aggressive efforts by the Fed to cut rates and take other actions to unfreeze credit markets will keep the country from plunging into a prolonged and deep downturn.
The Fed's action was expected to be quickly followed by a reduction by commercial banks in their prime lending rate, the benchmark for millions of consumer and business loans, by a similar half-point.
The central bank also announced that it was lowering its discount rate, the interest it charges to make direct loans to banks, by a half-point to 1.25 percent. This rate has become increasingly important as the central bank has dramatically increased direct loans to banks in an effort to break the grip of the credit crisis.
In addition to the rate cuts, the Fed has been moving to pump billions of dollars into the banking system to help unfreeze markets that seized up in dramatic fashion last month. The ensuing meltdown of financial markets caused the Bush administration to successfully lobby Congress to pass on Oct. 3 a $700 billion rescue package to make direct purchases of bank stock and buy up bad assets as a way of getting financial institutions to start lending again.
Thursday, October 30, 2008
Wednesday, October 29, 2008
News on GBP Mortgage Approvals
GBP MORTGAGE APPROVALS
Mortgage approvals in the U.K. inched higher to 33K from 32K in August, while lending surged to 2.2B in September as a result of lower borrowing costs. Despite the unexpected improvement, conditions may only get worse as Europe’s second largest economy slips into a recession, and may force the Bank of England to step in once again. Mounting growth fears has already led the BoE to lower the benchmark interest rate by 50bp for the first time since 2001, and the dovish outlook held by the MPC has raised speculation that the central bank will ease policy further, which would only stoke increased selling pressures for the British pound.
Mortgage approvals in the U.K. inched higher to 33K from 32K in August, while lending surged to 2.2B in September as a result of lower borrowing costs. Despite the unexpected improvement, conditions may only get worse as Europe’s second largest economy slips into a recession, and may force the Bank of England to step in once again. Mounting growth fears has already led the BoE to lower the benchmark interest rate by 50bp for the first time since 2001, and the dovish outlook held by the MPC has raised speculation that the central bank will ease policy further, which would only stoke increased selling pressures for the British pound.
Saturday, October 18, 2008
Forex News : US Fundamentals Deteriorates
US Fundamentals Deteriorates
by Korman Tam
10/17/2008 3:25:00 PM
Economic reports from the US continued to point toward further deterioration in fundamentals, thereby reinforcing sentiment of an imminent recession. The data also revealed a sharp collapse in consumer confidence in light of the recent market turmoil and financial system crisis. The University of Michigan consumer sentiment survey posted its steepest drop on record, collapsing far more than expected to 57.5 in October, versus calls for a decline to 68.0 from 70.3 in September. The current situation index declined sharply to 58.9 from 75.0 a month earlier while the expectations index slumped to 56.7 versus 67.2 previously. Housing data reflected continued weakness in the housing market, with housing starts falling by 6.3% in September to 817k units, its lowest reading in 17-years, versus calls for a smaller drop to 880k from 895k in the previous month.
by Korman Tam
10/17/2008 3:25:00 PM
Economic reports from the US continued to point toward further deterioration in fundamentals, thereby reinforcing sentiment of an imminent recession. The data also revealed a sharp collapse in consumer confidence in light of the recent market turmoil and financial system crisis. The University of Michigan consumer sentiment survey posted its steepest drop on record, collapsing far more than expected to 57.5 in October, versus calls for a decline to 68.0 from 70.3 in September. The current situation index declined sharply to 58.9 from 75.0 a month earlier while the expectations index slumped to 56.7 versus 67.2 previously. Housing data reflected continued weakness in the housing market, with housing starts falling by 6.3% in September to 817k units, its lowest reading in 17-years, versus calls for a smaller drop to 880k from 895k in the previous month.
Tuesday, October 14, 2008
Forex News : EUR Bail Out
Europe Steps up Bail-Out Efforts
by Korman Tam
10/13/2008 2:50:00 PM
The European bail-out plan comes on the heels of last week's British bank bail-out plan, which would effectively nationalize the UK's three largest banks. While it remains to be seen whether the unprecedented moves to pump liquidity into the financial system will be successful - it has stabilized the rapid deterioration in investor confidence and for the time being, halted the severe sell-off in global equities.
by Korman Tam
10/13/2008 2:50:00 PM
The European bail-out plan comes on the heels of last week's British bank bail-out plan, which would effectively nationalize the UK's three largest banks. While it remains to be seen whether the unprecedented moves to pump liquidity into the financial system will be successful - it has stabilized the rapid deterioration in investor confidence and for the time being, halted the severe sell-off in global equities.
Thursday, October 9, 2008
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Open Live Accounts with
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YM : myforexwatch
Or mail : myrichmat
For the indicators or free signals
Forex News Online : Interest Rate
Coordinated Intervention Fails to Quell Fears
by Korman Tam
In a coordinated effort to stem the global financial crisis, the Federal Reserve along with the ECB, BoE, BoC, SNB and several other central banks slashed their key interest rates by 50 basis points. The joint statement by the central banks said, "the recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability". Accordingly, the statement said that "some easing of global monetary conditions is therefore warranted". The unprecedented move underscores the dire predicament facing the global economy and the need for urgent coordinated action in order to stem further tightening in the credit markets and halt the rapid deterioration in confidence.
Heightened risk aversion continues to benefit the yen, propping the Japanese currency to its highest level in 3-years against the euro near the 135-level while surging to a near 7-year high versus the pound beneath the 171-handle. The greenback has also firmed against the euro and sterling, remaining buoyed near a one-year high versus the euro beneath the 1.36-level and its highest level since January 2006 against the pound under the 1.72-handle. Given the lingering uncertainty and burgeoning fears for a global economic recession, the yen will continue to be the safe haven currency of choice among traders.
by Korman Tam
In a coordinated effort to stem the global financial crisis, the Federal Reserve along with the ECB, BoE, BoC, SNB and several other central banks slashed their key interest rates by 50 basis points. The joint statement by the central banks said, "the recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability". Accordingly, the statement said that "some easing of global monetary conditions is therefore warranted". The unprecedented move underscores the dire predicament facing the global economy and the need for urgent coordinated action in order to stem further tightening in the credit markets and halt the rapid deterioration in confidence.
Heightened risk aversion continues to benefit the yen, propping the Japanese currency to its highest level in 3-years against the euro near the 135-level while surging to a near 7-year high versus the pound beneath the 171-handle. The greenback has also firmed against the euro and sterling, remaining buoyed near a one-year high versus the euro beneath the 1.36-level and its highest level since January 2006 against the pound under the 1.72-handle. Given the lingering uncertainty and burgeoning fears for a global economic recession, the yen will continue to be the safe haven currency of choice among traders.
Wednesday, October 8, 2008
Forex News : Interest Rate GBP
In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent, while the European Central Bank sliced its rate to 3.75 percent.
Other central banks also taking part include the banks of Canada, Sweden, and Switzerland.
China also cut its key interest rates Wednesday for a second time in less than one month to stimulate slowing economic growth amid the global credit crisis.
Other central banks also taking part include the banks of Canada, Sweden, and Switzerland.
China also cut its key interest rates Wednesday for a second time in less than one month to stimulate slowing economic growth amid the global credit crisis.
Forex News : USD Interest Rate Cut
WASHINGTON - The Federal Reserve, acting in coordination with other global central banking authorities, cut a key U.S. interest rate by half a percentage point Wednesday to steady a teetering economy.
The Fed reduced its key rate from 2 percent to 1.5 percent.
The Fed reduced its key rate from 2 percent to 1.5 percent.
Interest Rate: US to Cut Interest Rate In October
The minutes of the FOMC's September 16th meeting revealed deliberations for a rate cut, with Board members expressing greater pessimism over growth in the coming year. The minutes showed some members calling for a "policy response" to the detrimental impact of the financial crisis on growth. With the next Fed policy meeting at the end of October, we look for a 50-basis point rate cut from the FOMC, lowering its benchmark lending rate to 1.50%.
Friday, October 3, 2008
Non Farm Payroll September 2008
U.S. employers slashed jobs for an eighth consecutive month in August and the nation's unemployment rate soared to a five-year high of 6.1%, up from 5.7% in July and 4.7% from one year ago. That's the highest it has been for 5 years.
In August, the economy suffered a net loss of 84,000 jobs, worse than the market forecast for a 75,000 decline. Additionally, job losses in June and July turned out to be much higher than originally reported. The economy lost an astounding 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the Labor Department reported job losses at 51,000 in each of those months. So far this year, job losses have totaled 605,000.
In August, the economy suffered a net loss of 84,000 jobs, worse than the market forecast for a 75,000 decline. Additionally, job losses in June and July turned out to be much higher than originally reported. The economy lost an astounding 100,000 jobs in June and another 60,000 in July, according to revised figures. Previously, the Labor Department reported job losses at 51,000 in each of those months. So far this year, job losses have totaled 605,000.
Thursday, October 2, 2008
Non Farm Payroll
One of the most widely anticipated reports on the US economic calendar, the Employment Situation is a timely report that gives a picture of job creation, loss, wages and working hours in the United States. Data in the report relies on the Household Survey and the Establishment (or Payroll) Survey. While the Household Survey is based on the interviews to US households, the Establishment Survey queries business establishments, making it the preferred source of data. The Employment Situation's has many significant figures such as: Change in Non Farm Payrolls, Unemployment, Manufacturing Payrolls, and Average Hourly Earnings.
The headline figures for this report are reported monthly, as the total number of new jobs in thousands (say, 120K new jobs), and the unemployment rate.
The headline figures for this report are reported monthly, as the total number of new jobs in thousands (say, 120K new jobs), and the unemployment rate.
Trading News Caused Choppy Market
Trading will remain choppy in the coming days as markets eagerly anticipate the successful passage of the Administration's $700 billion rescue plan. The Senate is
scheduled to vote on a bailout plan this evening, with the House also
likely to vote by week's end.
scheduled to vote on a bailout plan this evening, with the House also
likely to vote by week's end.
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