if the fed can coordinate a cut with the ecb and the bank of canada all at the same time that would be nice
Coordinated rate cuts is essential to stabilize currency run. However, unless low i-rates flow through to consumers it is of no help to the economy. As we now see we are moving quickly into a deflationary environment this reinforces a reluctance to lend by banks as assets and collateral (borrowers equity) depreciate.
U.S. Recession to Be `Significantly Deeper,' Goldman Sachs Says By Lester Pimentel Oct. 3 (Bloomberg) -- Goldman Sachs Group Inc. said the U.S. economy will enter a recession ``significantly deeper'' than previously forecast, prompting the Federal Reserve to cut interest rates by at least 1 percentage point. The U.S.'s gross domestic product will decline in each of the next two quarters, with unemployment reaching 8 percent by the end of 2009, New York-based Goldman said in a research note. ``The sharp deterioration in both financial conditions and the economic data suggest the U.S. recession will be significantly deeper than we thought earlier,'' according to the report today. The government may use ``aggressive measures to stabilize the money markets, and a possible further easing of fiscal policy under a new administration.'' U.S. payrolls plunged in September, signaling the economy may be heading for its worst recession in at least a quarter century as the 13-month-old credit crisis on Wall Street finally hits home on Main Street. The U.S. economy lost 159,000 jobs last month, the most in five years, a Labor Department report showed. Analysts surveyed by Bloomberg had anticipated a drop of 105,000. The unemployment rate, the last to be reported before the presidential election, remained at 6.1 percent. Hours worked reached the lowest level since records began in 1964. Futures on the Chicago Board of Trade show an 100 percent probability the Fed will lower its 2 percent target rate for overnight lending between banks by at least a half-percentage point at its Oct. 29 meeting. Traders saw no chance of a cut a month ago. http://www.bloomberg.com/apps/news?pid=20601087&sid=aP.KRgaEpKjU&refer=home
Word on the street is that there may be 'surprise' rate cut coming, so you shorts better cover! Ooops.. Rates are already at zero..
I heard that Geithner is going to propose paying those with stellar credit rating 250 basis points to borrow money.