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US Federal Reserve awaits market response

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US Federal Reserve awaits market response


The US dollar has dropped against other major currencies as markets continue to digest the US Federal Reserve’s decision to slash interest rates. The historic move by economic chiefs is an attempt to halt the US economy’s increasingly fast slide. With rates near zero, the Fed is also looking at other ways to stop the rot. It is injecting massive amounts of money into credit markets as well as buying bad mortgage debt. But, the severity of the cut has taken some analysts by surprise.

“Well I think the Fed sort of gave a little head-fake to everybody here because everyone was expecting a fifty-basis-point cut, and we got a little bit more than that, and they are saying they are going to try to keep things within a range of zero to a quarter percent, which is actually a little bit more aggressive than people were anticipating,’‘ said David Henderson, a Wall Street broker. With rates expected to remain low for some time, Fed bosses will be holding their breath to see how markets respond. Earlier, US markets finished on a high with the Dow Jones up 4 percent and the Nasdaq even higher at 5.4 percent.
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