Skip to main content

Fed cuts key interest rate by 25 bps

The Federal Reserve, mixing concern about the feeble economy with worries about rising inflation, reduced short-term interest rates Wednesday for the seventh time since September, while signaling a pause in any additional rate cuts for now.
The Fed’s action brought the federal funds rate — the rate it charges banks for overnight loans — to 2 percent, from 2.25 percent, the lowest level since November 2004. It defended that step as necessary to counter the ailing housing sector and the “considerable stress” shadowing financial markets.
The move followed new indications that the economy remained fragile at best. The Commerce Department reported early Wednesday that the economy expanded only 0.6 percent on an annualized basis in the first three months of 2008, short of an overall downturn but still far from healthy.
The Dow Jones industrial average, which was trading up 178 points shortly after the Fed’s announcement, dropped sharply in late trading, ending down 11.81 points at 12,820.13.

Richard Yamarone, director of research at Argus Securities, said "claiming recession while economic output is expanding is like diagnosing a patient with the sniffles as having pneumonia".
But John Ryding, chief US economist at Bear Stearns, said "the fact that there was technical growth in GDP in no way alters our view that the economy has fallen into recession".
The official verdict will be made by the National Bureau of Economic Research. It puts "considerable weight" on GDP, but uses measures such as employment and income as well.
Many analysts believe the economy will probably contract in the second quarter as companies cut back on inventory.
"The increase in inventories is likely unintentional: corporations were seemingly surprised by the cooling off in demand," said Drew Matus, senior economist at Lehman Brothers.
However, others argue that tax rebates will arrive just in time to boost consumer spending and keep second-quarter growth positive too.
Carlos Gutierrez, the US commerce secretary, said the report suggests growth will be "slower but positive" in the first half.
Real personal consumption increased at a 1 per cent rate in the first quarter — still positive, but the weakest growth since the second quarter of 2001.

Comments

Post a Comment

Popular posts from this blog

RBS picks up 0.60% stake in Gateway Distriparks

The Royal Bank of Scotland (RBS) has picked up 0.60% stake in logistic services provider -- Gateway Distriparks. The bank has bought 6.40 lakh shares in the company for a total consideration of Rs 8.32 crore. Gateway Distriparks, incorporated in 1994, is engaged in the business of warehousing, container freight stations, providing handling and clearance of sea borne export-import trade in containerized form.
Post a Comment
Read more

Day End Report

The Sensex opened with a huge downward gap of 250 points at 13,856, and soon touched a low of 13,731. Another rise in repo rate and Cash Reserve Ratio by the RBI sparked off heavy sell-off in opening trades. However, fresh buying at lower levels helped the index recover all its losses by mid noon trades. A fresh round of buying in late trades saw the index surge to a high of 14,249 - up 518 points from the days low. The Sensex finally settled with a gain of 113 points at 14,220. The NSE Nifty ended with a gain of 60 points at 4,251. The market breadth was marginally positive- out of 2707 stocks traded, 1,370 advanced, 1,264 declined and 73 were unchanged today. Reliance Communications (RCom) zoomed 7.2% at Rs 509. Tata Steel surged 4.5% at Rs 743. DLF and Reliance Infra gained 4.2% each at Rs 458 and Rs 945, respectively. TCS and Bharti Airtel advanced 4% each at Rs 877 and Rs 780, respectively. Ranbaxy was up 3.8% at Rs 545. BHEL gained 3.7% at Rs 1,442. Reliance advanced 3.4% to Rs 2...
Post a Comment
Read more

Auto industry records highest-ever sales in Jan

Riding on the back of economic growth, easy availability of finance and the continuing fiscal stimulus, the domestic auto industry has posted the highest ever monthly sales in January. The strong growth is both in terms of passenger car volumes and the total vehicle sales. According to Society of Automobile Manufacturers (SIAM) data, the passenger car segment has posted a 32 per cent growth in domestic sales at 145,905 units in January, over the same month last year. The last highest-ever monthly sales in the segment were in March 2009, when it sold 129,358 units. Meanwhile, overall sales across the industry grew 45 per cent at 1,114,157 units. The earlier record of highest ever monthly sales was in October 2006, when the industry had sold 1,017,198 units. Individually, the umbrella passenger vehicle segment posted a 37 per cent growth, while the commercial vehicle (CV) segment grew 131 per cent. Also, the two-wheeler and three-wheeler segments rose 43 and 47 per cent, respectively.
Post a Comment
Read more