Fed Rates Cut By 0.25%,US Economy Grows By 0.6% In First Quarter

01 May

Posted by Shyam as Market News

The final and much awaited verdict is out today. The US Federal Bank has once again lowered its key interest rates by a quarter percentage point today. The Fed rates now stand at 2%, the lowest figures since 2004.Well the move is clearly aimed at stopping or probably delaying the Recession as far as possible. This is the seventh straight rate cut by Fed since mid Sept 2007.It means the banks will now lower their prime lending rates to business houses and other consumers. This would pump billions of dollars into the markets and economy in general.

Fed rates are very important considerings its massive effect it has on the economy of the country. Economists around the world do observe these movements from US regularly and then change their own countries rates in sync with it. The US markets were trading higher than 13,000 mark for the first time since mid Jan, but the rally didn’t last longer and finally the markets closed almost flat just because this might be the last Fed rate cut for some time.

Meanwhile the data released shows that US economy grew by a mere 0.6% in the first quarter in the USA. This a better than expected pace of growth in the US. The data doesn’t meet the criteria of a so called Recession in the economy but its not very well too. The Chairman Ben Bernanke recently accepted for the first time that a recession this year is very much possible.

The Indian markets might also react to this Fed rate cut news in the similar fashion which happened in US last evening. The markets would hang around the current levels. So just be cautious today while trading. More intraday calls will be around in a while.

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