Archive for December, 2007
Interbank Interest Rates Fall as Central Banks Succeed in
Yesterday, the European Central Bank pumped in a record $500 billion into the financial system which resulted in a record drop of 0.5% in the 2 week euro interbank LIBOR rate. The Bank of England similarly pumped in $10 billion at substantially lower interest rates than the interbank rate of 6.53%, the bulk of which was auctioned to bidders at the minimum rate of 5.36% which is below the base interest rate of 5.5%. This resulted in the rate dripping yesterday to 6.38% and today to 6.20%
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Fed Open Market Committee, December 11
· Risks to economic growth have increased substantially · The probability of more rate cuts is higher · We expect a 25bp rate cut in the next FOMC meeting The FOMC decided on October 31 to cut the fed fund rate as well as the discount rate by 25 bp. Following that decision, members seemed to have a neutral stance with respect to the economic outlook. As they expressed in the rate decision, “the upside risks to inflation roughly balance the downside risks to growth.” This assessment was to some
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