United States: Federal Reserve Lowers Rates and Disappoints Wall Street

Text by: RFI Follow

The American Central Bank released the lethal weapon yesterday Tuesday March 3. She lowered interest rates to everyone's surprise. However, this did not have the desired effect.

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Wall Street fell heavily at the close -3%. An unexpected drop in interest rates by half a percentage point is, however, an extremely rare decision. US rates are now between 1% and 1.25%.

The last time the Federal Reserve urgently decided to lower its rates was in October 2008, in the midst of a financial meltdown. Already, the markets had reacted very badly, more frightened by the haste of the decision than reassured by its implementation. It's the same phenomenon that is happening today.

Dampen the shock if the epidemic spreads to the United States

With the US economy still healthy, investors believed the decline would not occur until the next meeting of the central bank council, scheduled for two weeks from now. The most nervous explain that they are waiting not for the Fed but especially for decisions from the World Health Organization (WHO) to stop the epidemic.

For the time being, making credit cheaper is of little use when businesses and individuals no longer borrow for lack of confidence in the future. Others welcome, on the contrary, a decision taken before the crisis, which will cushion the shock if the epidemic were to spread to the United States and really paralyze the American economy. Which is far from the case at the moment.

► Read also: The Fed lowers its key interest rates for the first time in 11 years

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• United States
• Economy

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