Federal Reserve raises discount rate

Seems like the US Central bank is making efforts to put across the message to investors that the recession may be coming to a close by raising the discount rate for borrowing banks. But there is still uncertainty and fear in the markets, that just in case the the bank withdraws stimulus measures and other global Central banks may follow suit. Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York ellaborated on Reserve Bank's move of lifitng discount rate,: "There’s no inflation for the Fed to fight. If easy monetary policy and supportive fiscal policy have helped boost equities thus far, data such as today’s CPI argues for a continuation of supportive policies.”


The US markets have seen week long gains, which have helped build investor confidence in the economy recovering. I just hope this trend continues and global markets take cues from rising US stocks.

Indices rise on Fed. cut news

Markets in the U.S., Europe and Asia rose yesterday,18th March 2008, after news was going round that the Federal Reserve will cut the interest rates further on direct loans offered to banks. The markets witnessed a very good trading day showing an increase between 3 percent to 4 percent in the markets overall, showing some amount of confidence generated among the investors. Apart from this there were still concerns among investors that the credit loss crisis faced by banks is going to widen even more, discouraging people from taking home loans. The Manufacturing also slowed down a lot, effecting the industry and it's earnings. At one end the Federal Reserve is figthing hard to retain investor confidence by cutting interest rates and on the other end investors are loosing hope of any recovery in the credit loss situation, creating more liquidity problems in the market, which is lowering the dollar rate against the Euro, the Pound and the Yen, putting the pressure back on the Federal Reserve to come up with a concrete, effective and a permanent solution to the economic slowdown. It is very likely that the Federal Reserve may not be able to bail out all the banks during this year, it is very likely that this situation is going to continue in the next year also.