Sharp interest cuts in UK fails to cheer up the stock market!

Sharp interest cuts in UK fails to cheer up the stock market!
Dec 5, 2008 03:00
DREAMLIFE Points: Join Date: Sep 5, 2007 Status: offline	From today, Europe commences to cut the interest rates sharply since bad economic figures appear in all leading economies. The European central bank declares to lower 75 basis points to 2.5 percent. This is the biggest move since it established. In the UK, Bank of England decides to cut the offcial interest rates by 1 percent. But the stock market wasn't cheered up by this good news. The shares of Barclays, Lloyds and Standard Chartered reduced on Dec. 4th. CAC40 Index in France and DAX Index in Germany both decreased by 0.17 percent and 0.07 percent. Since the economic downturn is deep and prolonged, an economist says that zero per cent rates will be reached before the middle of 2009. Do you think it is possible?

Dec 5, 2008 03:00

DREAMLIFE
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Join Date: Sep 5, 2007
Status: offline

From today, Europe commences to cut the interest rates sharply since bad economic figures appear in all leading economies. The European central bank declares to lower 75 basis points to 2.5 percent. This is the biggest move since it established.

In the UK, Bank of England decides to cut the offcial interest rates by 1 percent. But the stock market wasn't cheered up by this good news. The shares of Barclays, Lloyds and Standard Chartered reduced on Dec. 4th. CAC40 Index in France and DAX Index in Germany both decreased by 0.17 percent and 0.07 percent.

Since the economic downturn is deep and prolonged, an economist says that zero per cent rates will be reached before the middle of 2009. Do you think it is possible?

Dec 5, 2008 21:37	#1
COOLSPRINGS Points: Join Date: May 19, 2008 Status: Offline	People in UK were encourage by their prime minister to plant more vegetables in their back yark to survive food crisis.

Dec 6, 2008 04:05

GEARBOX
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Join Date: Dec 3, 2008
Status: Offline

First of all, the Fed Funds rate is only a target and is used by the Fed to increase or decrease money suppy in the economy, and yes it could go down to zero. Japan did this during 2001 to 2006. The US target fed rate is 1%, but the realized rate for the past quarter was .67%. Implications are the lower the rate, the more money is in circulation which would stimulate the economy. Once the rate goes to zero, the Fed has other ways of increasing money supply by buying up T-bills and asset backed securities. Hope this helps, Allan

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