The record shows that the Fed may cut again

The record shows that the Fed may cut again

The Federal Reserve Board announced on the 9th of the last meeting of the monetary policy decision-making meeting records show that the Fed rate cut was taken substantial action, worried that the credit crisis is because the United States will inhibit economic growth.

Another possible rate cut by the Fed to stimulate economic growth impact of the good news, on the 9th New York, the Dow Jones index and the Standard & Poor's stock market index hit both intraday and closing record.

Once again the possibility of a rate cut

The Fed last regular meeting on September 18 is to be held. The records show that the Fed policy makers was very worried about the credit crisis and the housing market downturn could undermine the economic health of the United States. They believe that because of volatile financial markets, the United States faces economic prospects, "particularly high uncertainty," downside risk increase. In the next few months, the credit crisis may deepen the downturn extent of the housing market and affect consumer spending and business investment growth. At the same time, some policy makers worried that the economic downturn would exacerbate the credit crunch, and the credit crunch would, in turn, deepen the economic downturn degree.

Policy makers also believe that, as economic growth slowed down, and the inflation situation has improved, inflation prospects of a rate cut will not have a negative impact. At the same time, they also predicted the United States may be further employment growth rate slowed.

According to the records, the Fed in August on credit crisis also held two telephone conference said that they would take all measures to avoid damage to healthy economic credit crisis, and to seek the financial system in addition to the capital injection means other than to solve the crisis.

August 17, the Fed announced that it would reduce the discount rate 0.5 percentage points in order to increase market liquidity. In September 18th at the meeting, the Fed policy-makers unanimously agreed to lower the federal funds rate 0.5 percentage points, from 5.25% to 4.75%. The cut rate is twice the market had expected.

Stocks are expected to grow higher

On the New York stock market closed, the Dow Jones industrial average rose 120.80 points to close at 14164.53 points, or 0.86%, a record high close; Intraday once climbed to 14166.97 points, set intraday record. The Standard & Poor's 500 index rose 12.57 points to close at 1565.15 points, or 0.81%, a record high close; After trading as high as 1565.26 points, hitting intraday highest point. The Nasdaq composite index rose 16.54 points to close at 2803.91 points, or 0.59%.

Wilmington Trust shares management departments responsible person Rex Macey that the Fed does not think the United States economy will be a slowdown in the growth of large-scale, which enable investors relieved. Before investors have been worried that the Federal Reserve to cut interest rates so drastically is due to the economic prospects of a problem.

Standard & Poor's investment policy committee recently estimated that stocks in the remainder of this year, another slight rise. The reasons include: First, the Federal Reserve will cut at least once, probably in October at the meeting of the lowered interest rates 4.50%; Secondly, the S & P 500 enterprises in the third quarter operating profit is expected to exceed the current estimate of 2.4%; Third, the dollar continuing to slide , could further push up the operating profit enterprises, as S & P expects the S & P 500 Index 45% of revenue from overseas business. Fourth, Wall Street is about to enter the corporate profits are usually better performance in the fourth quarter.