Crisis Far From Over, Despite Emergency Rate Cut
January 23, 2008 | 1:14 pm | by t-blender |Rate It:
NEW YORK (Reuters) - The Federal Reserve’s huge emergency rate cut on Tuesday did little to allay fears of a brewing U.S. recession even though panic selling in global stock markets has moderated.
The three-quarters of a percentage point cut in the Fed’s short-term interest rate target, to 3.5 percent, has helped restore some investor confidence, reflected in the rebound in many overseas stock markets.
Even so, many investors continue to brace for a recession. Major U.S. stock indexes closed down more than 1 percent after the Fed’s aggressive move, although they recovered from severe declines shortly after the market opening.
“It’s simply now a consumer-led mild recession that will show up in the first- and second-quarter GDP numbers in the negative — with a minus sign,” said Bill Gross, chief investment officer of Pimco, or Pacific Investment Management Co.
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