As per my previous post about the Federal Reserve lowering rate, as of this morning (US time) they have indeed lowered their rate to as low as 75 basis points. Although, the expectation in the market is around 100 to 200 basis points in the view to shock the market and induce the economy - 75 basis points is still relatively high and in fact higher than what they have provided recently.
As a matter of fact, the Federal Reserve has cut the benchmark lending rate by 2 percentage points this year, the most aggressive easing since the federal funds rate became a target of policy in the late 1980’s.
The current lending rate for the Federal Reserve is 2.25 percent.
This created a rally in the markets as the Dow is up 356.09 points (as of this writing). The ASX 200 futures is up 104.9 points, the Nikkei is up 176.65 points (all current as of this writing).
Expect to get a spurt on the local markets because of this announcement. On technical analysis, there are some good opportunities for short-term gains. Fundamentally, this action is an attempt by the officials to prop up the faltering economy and restore faith in the US financial system. In a way, this is telling something about the US economy as the Federal Reserve is trying their best to aggressively tackle this ongoing issue.
Will this market hold higher? Only time will tell…
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