US Recession and Britain

The Federal Reserve Bank in the US has lowered the interest rates by 3.5% in order to stop the recession. There has not been an expectation of the Federal Reserve reducing the costs being borrowed, however. It seems that this market reduction on interest rates is still being seem as a gloomy middle to the overall housing market issue. There is still a housing market crisis that will take several months, perhaps even the entire year to fix. Other rates that have been cut by the Federal Reserve include the discount rate. The interest charged by the banks for overnight loans have been cut. This rate was cut to four percent, which was also another three and a quarter cut to a rate.

President Bush has also come into the action with a plan. There has been a rescue package released on Friday that is supposed to help with tax breaks for the American people. There has been a lot of controversy surrounding Bush’s need to reduce the taxes and whether this will be a short fix or something that will cause overall long term problems. The tax rate cuts that he has implemented did not have any positive effect for most of the individuals in the financial stream. In fact is has left the investors quite unimpressed by the whole affair. The only thing that we have been able to see is a reduction in the New York index by one percent at the time of London’s market closing.

Economist Rob Carnell has a lot to say regarding the rate cuts and the fact that there may be more coming in the near future. He believes that it is unusual for the Federal Reserve to decide to cut rates again and in fact it is quite improbable, however with the surprise on Tuesday it cannot be ruled out that there will be more.

The Bank of England is also supposed to have talks regarding rate cuts, and speculation is that they will also implement some type of rate cut in the new future. The British Chamber of Commerce spoke yesterday that though they don’t expect the rates to be cut they are nevertheless preparing for such things to happen. They are further surprised by the Federal Reserve Bank in the US cutting their rates due to the credit crunch.

It seems that the UK has a very rare track record of changing the rates without some type of schedule being in place. The last time the Bank of England had a similar surprise rate cut to that of the US was with the terrorist attacks back in 2001. There is also the index that is showing a seven year high, with it being at 6700. The index did lower yesterday to a point below what it was in 2005. This has caused some concern especially with Footsie, which saw an 11% decrease for the start of 2008. The entire issue seems to be that there are rate cuts trying to stop the recession in America and the UK is trying to find ways around being majorly affected.

Back To January 2008 Financial News
Purchasing with Credit Cards
Traps with Credit Cards
Understanding Credit Scoring
What Is A Credit Reference Agency
Testing Your Debt
10 Ways To Save Money
Benefits of Savings
How To Save of Invest Your Money
Individual Savings Accounts
Sainsbury’s Bank Internet Savings Account
Product Types For Savings
Saving with Child Trust Funds
Savings and Investments Advice
Trouble Ahead with Free Banking
Warning: Savings Rate Change
What Makes Consistent Savings Account?
Credit Building Solutions
Britain Needs to Protect Itself
Free Banking or Unfair Bank Charges
Reintroducing Child Savings
How To Get The Most From Reward Credit Cards - Part 1
How To Get The Most From Reward Credit Cards - Part 2
UK Economy Growth
UK Rate Cut
US Recession and Britain