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FED cuts rate
Comments
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Can someone with more brain cells than me explain what a "range" of base rates means in the US?...much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0
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neverdespairgirl wrote: »Can someone with more brain cells than me explain what a "range" of base rates means in the US?
When I started this thread I was watching the announcement on Bloomberg and it confused me. I can only guess that it means they have the ability to change the rate within that range without the formality of the monthly meeting?0 -
Can someone with more brain cells than me explain what a "range" of base rates means in the US?
The Fed has two main Interest Rates.
The Discount Rate which is rarely mentioned by the meeja but is actually often more influential on overall rates, and the Federal Funds target (usually, incorrectly described as the Fed Funds rate)
Federal Funds is the term used for overnight and short term funds traded between Banks and other market participants, and is controlled (or attempted to be controlled) by the Federal Reserve Bank via their open market operations.
The Fed Funds Target is the headline rate that is reported, and after yesterdays's FOMC meeting has been set between zilch and 1/4. By setting this the Fed has announced that they will attempt to have a Fed Fund rate in that range.
The Discount Window, where Banks can Discount securities in exchange for $$ is one way the Fed can engineer the Funds rate into it's desired target range.
The previous Fed Funds Target was 1%, and the Fed were very unsuccessful at achieving that target, so it is open to question whether or not they will actually get the Funds rate into this target range regularly.
In many ways the system is not hugely different to the way the ECB or BOE operate. The 'headline' rate, which over here we call the Base Rate is really more of a target, rather than an actual rate that money is lent/borrowed at.....which is why all this ill-informed twittering in the media about Banks not passing on Base Rate changes is so laughable.'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Originally Posted by free4440273
Dow holding up reasonably well; gonna be a case of Sell the news...Hopefully we can get a nice carry through the holiday season into new year, would set up a nice short opportunity.
...the Santa Claus rally has been missing this year, and time is fast running out for one...although I take note of higher lows on the Dow :think:BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0 -
Crazy times.
Maybe the pound could make a slight recovery on the dollar now?
British rates will also go all the way down.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
free4440273 wrote: »Originally Posted by free4440273
Dow holding up reasonably well; gonna be a case of Sell the news...
...the Santa Claus rally has been missing this year, and time is fast running out for one...although I take note of higher lows on the Dow :think:
but then I look at Bonds and the yield:eek:; Great Depression II now guaranteed :think:BLOODBATH IN THE EVENING THEN? :shocked: OR PERHAPS THE AFTERNOON? OR THE MORNING? OH, FORGET THIS MALARKEY!
THE KILLERS :cool:
THE PUNISHER :dance: MATURE CHEDDAR ADDICT:cool:0 -
Yes, given the seasonal bias, and the ability of recent days to rally on bad news, I was hoping for 9500 ish on the Dow, 1000 ish S&P, 1380 ish Nas, would setup a great short level, but seems a little optimistic against the economic backdrop. Dax already had a very nice selloff this am, though a recovery of sorts is under way.free4440273 wrote: »Originally Posted by free4440273
Dow holding up reasonably well; gonna be a case of Sell the news...
...the Santa Claus rally has been missing this year, and time is fast running out for one...although I take note of higher lows on the Dow :think:Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0 -
free4440273 wrote: »some would argue real rates are indeed negative: massive purchases recently of - I kid u not - Safes in the USA.
Makes sense - when we say 'your money is in the bank' what that really means is that the bank owes you that amount of money.
Should the bank go bust, good luck getting 'your' cash back in anything like a timely manner.
Legal tender on the other hand is always going to be useful, not subject to the competence of the bank and ready on demand.
If interest rates go stupidly low and we see price deflation, seems to me that it makes a lot of sense to simply have your savings as cold, hard cash and keep it somewhere safe. Why take the risk that you will lose your money in an unstable banking system for the paltry amount of interest that will be paid?--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
Sorry, Im not into finances that well - do we really feel its best to withdraw all monies and stick them in a safe?
Wont the value of the paper go down anyway?
Is it worth looking at buying a property which at least wont disappear?
If I were 30 Id be less fearful, but we are coming up to retirement age and all I can see is 40 years hard work going down the drain at the moment.0 -
Banks go bust in the US quite regularly the FDIC is well pracitsed and allegedly very efficient at repatriating customers with their moneyShould the bank go bust, good luck getting 'your' cash back in anything like a timely manner.Hope for the best.....Plan for the worst!
"Never in the history of the world has there been a situation so bad that the government can't make it worse." Unknown0
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