220868 Resource 119244 120646 120646 1229456540245 1229458745299 Controlled Fed Cuts Rates by 75 Basis Points, But It May Not Help the Economy

New Fed Funds rate of 0.25%

<font size="2"><span style="font-family: verdana,arial,helvetica,sans-serif;">Japan, look out! The U.S. is planning to beat you in a race to the bottom. The probability of a <a href="item/218579" target="_blank" title="0% Fed rate, Fed rate cut, Fed rate 0.25%, Fed Funds rate, stock market, U.S. dollar">0% Fed rate</a> just got more likely today. The Federal Reserve just cut the <span style="font-weight: bold;">Funds rate </span>by 75 basis points to <a href="http://blog.gftuk.com/public/item/220866" target="_blank" title="0% Fed rate, Fed rate cut, Fed rate 0.25%, Fed Funds rate, stock market, U.S. dollar">0.25%</a>.</span><br style="font-family: verdana,arial,helvetica,sans-serif;" /><br style="font-family: verdana,arial,helvetica,sans-serif;" /><span style="font-family: verdana,arial,helvetica,sans-serif;">The decision was unanimous, and the move is sending the <a href="http://finance.yahoo.com/q?d=t&s=^DJI" target="_blank" title="0% Fed rate, Fed rate cut, Fed rate 0.25%, Fed Funds rate, stock market, U.S. dollar">U.S. stock market</a> immediately higher. The Fed has vowed to use every tool in its toolbox for <span style="font-weight: bold;">economic stimulus</span>, and this is just one of the steps it is taking.</span><br style="font-family: verdana,arial,helvetica,sans-serif;" /><br style="font-family: verdana,arial,helvetica,sans-serif;" /><span style="font-family: verdana,arial,helvetica,sans-serif;">However, the true effectiveness of this move will depend largely on <a href="http://www.bloggingstocks.com/2008/12/16/watch-the-banks-not-the-fed/" target="_blank" title="0% Fed rate, Fed rate cut, Fed rate 0.25%, Fed Funds rate, stock market, U.S. dollar">banks</a>. While the <span style="font-weight: bold;">Fed Funds rate</span> provides a discount to banks for their lending, it remains to be seen whether this will encourage banks to lend to consumers. Sure, consumers will </span><span style="font-style: italic; font-family: verdana,arial,helvetica,sans-serif;">want</span><span style="font-family: verdana,arial,helvetica,sans-serif;"> to borrow -- but they may not be able to, due to tighter <span style="font-weight: bold;">lending standards</span>.</span><br style="font-family: verdana,arial,helvetica,sans-serif;" /><br style="font-family: verdana,arial,helvetica,sans-serif;" /><span style="font-family: verdana,arial,helvetica,sans-serif;">If the banks do lend more, however, it could <span style="font-weight: bold;">stimulate the economy</span>. But that will be the real question. Indeed, if even a <span style="font-weight: bold;">0% Fed</span> can't stimulate the econo<font size="2" style="font-family: verdana,arial,helvetica,sans-serif;">my, it may diminish the relevance of the Federal Reserve overall.</font></span></font><font size="2" style="font-family: verdana,arial,helvetica,sans-serif;"><br /><br />The <span style="font-weight: bold;">U.S. dollar</span>, as expected, is down in <span style="font-weight: bold;">forex trading</span> on this news. A lower rate is seen as a sign of a weak <span style="font-weight: bold;">economy</span>, and economic weakness does not usually support a currency. However, if the move does work, and lending does spur <span style="font-weight: bold;">consumer spending</span> again, there could be some strength ahead for the U.S. dollar.</font><br /><br /> 9 application/xml false 0% Fed rate Fed Funds rate Fed rate 0.25% Fed rate cut forex trading stock market U.S. dollar Will the rate cut really matter to the economy? http://www.consumerismcommentary.com/2008/12/16/the-federal-reserve-cut-is-irrelevant/ Rate cut and forex trading http://www.gftforex.com/land/index.asp?aid=446 <script type='text/javascript'>reddit_url='http://forex.gftforex.com/public/item/220868'</script> <script type='text/javascript'>reddit_title='Fed Cuts Rates by 75 Basis Points, But It May Not Help the Economy'</script> <script type="text/javascript" src="http://www.reddit.com/button.js?t=2"></script> <script type="text/javascript" src="http://tools.tipd.com/evbs.js"></script> <script type="text/javascript"> evb_url = 'http://forex.gftforex.com/public/item/220868'; evb_big(evb_url); </script> <script type="text/javascript"> digg_url = 'http://digg.com/business_finance/Fed_Cuts_Rates_It_May_Not_Help_the_Economy'; </script> <script src="http://digg.com/tools/diggthis.js" type="text/javascript"></script> <script type="text/javascript" src="http://d.yimg.com/ds/badge2.js" badgetype="small"> http://forex.gftforex.com/public/item/220868 </script> <a href="javascript:q=(document.location.href);t=(document.title);void(open('http://www.pfbuzz.com/node/add/drigg?url='+escape(q)+'&title='+escape(t),'','resizable,location,menubar,toolbar,scrollbars,status'));" title="Submit to PFBuzz.com" alt="Submit to PFBuzz.com"><img src="http://www.pfbuzz.com/ads/pfbuzz-32.png" alt="Submit to PFBuzz.com"/></a> Mozilla/5.0 (Macintosh; U; Intel Mac OS X 10.5; en-US; rv:1.9.0.4) Gecko/2008102920 Firefox/3.0.4 127.0.0.1 127.0.0.1 mmarquit 66.182.71.19 false true false false true 119244 blog blogsite/GFTForex/web