September 18, 2007

Interest rate cut in the US

All eyes will be on the US Federal Reserve today as they are expected to lower interest rates. With the financial world in turmoil over the past week or so. Some people may think that this move, if it happens, may be considered as a panic, rather than a purely financial related decision.

How this move would effect the other markets is unknown, the UK pound is very strong against the US Dollar but this will have little weight in stopping events like the Northern Rock problems, which appear to have died down since the UK government has promised cover savers money.

One thing is for sure, the whole financial sector needs to create some renewed confidence in the whole banking system, as the banks cannot afford to see queues of people waiting to withdraw their savings in the way that we saw at Northern Rock.

Source [Daily Reckoning]