[manojjonam10]

The Federal Reserve has cut its key interest rate from 1.5% to 1% in a widely expected move, as it aims to avoid a possible US recession.

Earlier this month the Fed cut rates from 2% to 1.5% in an emergency move, which was co-ordinated with five other central banks.If the interest rates are slashed it will slow down the growth of the economy for this fiscal year.

[MHJ]

There are rumors circulating that interest rates may even be dropped to zero. Granted, I find that a little tough to swallow.

[atto]

Originally Posted by MHJ »

There are rumors circulating that interest rates may even be dropped to zero. Granted, I find that a little tough to swallow.

Highly, highly unlikely, but technically possible. The difference between 1% to 0%, and 2% to 1% is astronomically bigger. Then again, Japan has theirs at .3%.

Unfortunately, I believe this is the wrong move for the Fed. Since we're in stagflation, we do need to tend to a stagnating economy, but also need to watch out for inflation. Flooding the money supply will only make matters worse in the future.

[rock]

So then why does the fed keep cutting rates again? seems like all they do is slab rates and shake the money tree.

[DianaR]

And they wonder why US citizens don't have savings accounts?

The rate they are paying on them is painful compared to what you stand to make with other investments, but I guess its better than nothing!

All hail the CD!

[sevensa]

Originally Posted by DianaR »

And they wonder why US citizens don't have savings accounts?

The rate they are paying on them is painful compared to what you stand to make with other investments, but I guess its better than nothing!

All hail the CD!

The issue about the low average savings in the US is not about to the lack of savings accounts and investing it in instruments with potentially higher returns. If they were investing it somewhere else, this will still be considered saving, but they are not. Many are spending more than they earn and living on credit.

[florentin]

the logical question is:

'if the feds are slashing interest rates so much, why aren't the banks?'

also, why aren't the banks opening up opportunity for more loans?
it seems to me they are staying away from the attempts at a market boost