Tuesday, November 4, 2008

Federal Reserve United

By a rare unanimous vote,the Federal Reserve has cut its key interest rate by o.5, to 1.0%.It can cut the rate all the way to zero if it chooses to.In its statement,the central bank noted that industrial output has weakened,but inflation is expected to moderate to levels of price stability.While recent actions have helped,downside risks to growth remain.Slow foreign economies will hurt U.S. export prospects.Recently,the Fed has expanded its balance sheet-unlike in the Great Depression,when the Fed contracted it.Today,the Fed has over 700 billion dollars in its account.And it has extended swap lines to 14 countries.A swap line provides U.S. dollars in exchange for foreign currencies,in order to increase confidence.Swap lines of 30 billion dollars each have been granted to Brazil,Mexico,South Korea and Singapore.

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