What is the US Federal Reserve playing at?
Yesterday's announcement of an increase in the US Federal Reserve's emergency rate to 0.75% has prompted a number of discussions within the US and worldwide financial sector. The emergency rate is simply the rate that US banks are charged to borrow money off the Federal Reserve, and while it has no immediate impact upon the Fed Funds Rate (which is effectively the US version of UK base rates), it has prompted speculation that US base rates could rise in the short term.
US base rates have been around the 0% level for some time now with the authorities keen to increase lending capacity within the economy in order to try and pull the country out of the recession. Thankfully, the Federal Reserve has today confirmed it is unlikely that US base rates will rise significantly in the short to medium term with speculation they will remain at near 0% for some time to come. The US economy has improved over the last few months but in line with the likes of the UK, the Eurozone and the general worldwide economy the performance of the economy has started to falter of late.
In simple terms, where the US leads the rest will follow with all eyes now on US base rates in the short to medium term.
Share this..
Related stories
Royal Bank of Scotland reassesses small business loans
Royal Bank of Scotland, the UK bank which is majority owned by the UK taxpayer, has confirmed that a number of unprofitable small-business loans and overdrafts have been transferred into a non-core subsidiary. Despite assurances that customers will see no difference in the level of interest rate or level of performance there are fears that those in difficulty may see their situations compounded in...
Read MoreIcelandic credit rating under negative review
Stand and Poors, the renowned credit rating agency, has today placed the Icelandic national credit rating on negative alert after the banking collapse compensation bill was blocked by the Icelandic president. This is yet another massive blow to the Icelandic government who are still reeling from the after-effects of the current blocking of compensation payments to the UK government and the Netherl...
Read MoreHow Does It Now Pay To Borrow More?
As the rate of interest charged on personal loans continues to rise in line with the mortgage market, we have arrived at the crazy situation where banks and loan companies are quoting reduced interest charges for higher value loans. In the past this has been the standard practice with more margin available in the longer term, but surely the financial institutions should be discouraging larger loa...
Read MoreBank of England cuts rates
The Bank of England's lending rate was cut by 100 basis points from three per cent to two per cent today.Deteriorating economic conditions have led the Bank to reduce the rate in each of the last three months.This is because interest rate cuts generally make loans cheaper for customers, as they are passed on by loans firms.However Michael Coogan, director general of the Council of Mortgage Lenders...
Read MorePawn stars in the high street
With the fourth interest hike rate now confirmed by the bank, high street banks will be ever warier of lending to people with poor credit ratings, which may explain why pawn shops are back on the streets in a big way.Although there were only 50 to 100 pawnbrokers in Britain during the 1970s and 80s, nowadays the high street boasts around 800 pawn shops, according to the National Pawnbrokers Associ...
Read More