Fed Rate Cut Recap: Federal decision and lowest interest rates

After yesterday’s fed cut of half a percent, the Federal Reserve Chairman Ben S Bernanke hinted that he is completely ready to cut interest rates to the lowest seen on record, if the central banks action does not do anything to halt the deepening economic downturn.

After the feds mentioned in their statement inflation threats, foretelling “Levels consistent with price stability” policymakers said that “downside risks to growth remain” even once their half a point cut.

It’s said that the Policy maker’s next move would depend on if the financial system starts moving and channel credit to businesses and consumers, however the huge risk is that the several quarters of economic downturn, and with consumer spending declining and unemployment soaring this will stop banks from encouraging new lending.

Source: Bloomberg