This week, the US Federal Reserve (Fed) will speak and the market will listen.
After sifting through mixed corporate profit reports and uneven readings on the economy, Wall Street — and other stock markets around the world — will find out the answer to the long-debated question of whether another interest rate cut is in the offing.
The Fed, which meets Tuesday (October 30) and Wednesday (October 31), is in a bind. The credit markets remain squeezed, but energy and food costs are soaring and the dollar is tumbling. Controlling inflation and preserving market liquidity is one the central bank has always tried to balance, but the situation now has never been as precarious as before.
‘Federal Funds Rate’ – explained in simple terms
On September 18, 2007, the US Federal Reserve (the “Fed”) cut its target Fed funds rate by 50 basis points (half-of-a-percentage point) to 4.75%, giving a boost to stocks markets worldwide.
The Fed also cut its discount rate by another 50 basis points, bringing it down to 5.25%.