The Federal Reserve lowered the federal funds rate from 2.25% to 2% today during the scheduled meeting of the Federal Open Market Committee, saying that the current measures may be enough to remove the risks.
The U.S. dollar stopped its 2 days growth period and started to go bearish against other currencies today after the Asian trading session ended. Investors’ attention turned to the Fed chairman Ben Bernanke’s testimony before the U. S. Congress that is scheduled for today.
The U.S. dollar is trading higher than its yesterday’s close level now as the investors are waiting for the fourth quarter GDP data to be released today.
Yesterday the Federal Reserve lowered the benchmark interest rate from 3.00% to 2.25% to help the banking institutions during the times of global financial turmoil, but will the investors’ expectations for the further cuts be satisfied?
The South African rand gained against the U.S. dollar for the fourth day today as the stock markets throughout the world were stimulated by the Federal Reserve’s decision to pump about $200 billion into the global banking system.
The release of the FOMC minutes for January 29/30 meeting today gave traders more insight about the Fed’s vision and strategy. Dollar started to lose its positions right after the release and shortly reversed its daily gain against euro.
Today, the Federal Reserve System decreased the national benchmark interest rate by 0.75% — from 4.25% down to 3.50%. This was an emergent move to stimulate the financial liquidity amidst the tumbling stock markets.
The U.S. Federal Open Market Committee lowered its interest rate for open market operations by 25 basis points to 4.25%, while the discount rate for central bank to banks type of lending lending was also cut by 0.25% to 4.75%.
Little time remains before today’s FOMC meeting, which will decide the future target interest rate for the U.S. banks. Dollar gained a some weight against euro on some marginal expectations that Federal Reserve will cut rates by just 25 basis points instead of 50 points predicted by the current futures rate.
U.S. dollar ended this week on a rising edge against euro, pound and yen after Fed’s Chairman Ben Bernanke joined Donald Kohn in his hinting the markets, that next interest rates cut will be most probably made during FOMC’s December 11 meeting.