Is the US Federal reserve base rate cut enough?
It has been announced that the US Federal reserve have cut US interest rates by 1% this evening in the hope that this will stimulate the US economy which has been in a downtrend for some time. The move was very much expected by the stock market and the UK government is expected to follow suit over the next few days.
However there is an ongoing debate as to whether the interest rate cut will have a major impact on the US economy where money market finance is still very much below the levels pre the credit crunch. At this moment in time it seems that every attempt to try to refloat the economy has failed and we are seeing literally billions of dollars being spent with very little impact. If it is found that the reduction of interest rates does not assist with the refloat of the economy many experts are struggling to find any real alternative.
As we approach the US presidential elections later this week there is a feeling that the economy may well offer a useful weapon for John McCain as he struggles to secure enough votes to even make the presidential election a close fought battle.
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