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Central Banks: Fed

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Emergency 75bp rate cut

Wed, Jan 23 2008, 08:16 GMT
by Marina Schiaffino

FXstreet.com

Only seen before after 9/11, the Fed takes a huge step in lowering interest rates and cuts 75bp in an emergency move, lowering its interest rate to 3.5%. GBP, EUR, CHF soar on the news, but again, all pairs, after reaching extreme levels, have retraced big time in a very good technical move. More information at the Advisor Blog.

Check the effect that this sudden cut has over the pairs in our Rates and Charts Section or compare the movements of the different banks in our World Interest Rates Table.

• · Board of Governors of the Federal Reserve System
• · View the past interest rates data on our Economic Time series
  
• · More information in our Spanish website: Cobertura especial - Trichet, las actas del BoE y la sorpresa de la Reserva Federal
  
  

In-Depth Analysis: Fundamental

• · US: The Fed Slashes The Funds Rate 75 Basis Points by Wachovia
• · US: FedWatch - FOMC meeting outside the regular schedule by BBVA Bancomer
• · Morning Report - The Fed responded to the carnage in global equity and credit markets by Westpac Institutional Bank
• · Daily Market Briefing - US Dollar to Remain Weak as Fed Prepares for another 50bp Cut on Jan 30 by FXCM
• · Daily Global Commentary - Fed Lowers Funds Rate in Surprise Move, Timing of Further Action Is Not Clear by Northern Trust
• · FOMC: Aggressive cut by 75bp to 3.5% by Danske Bank A/S
  
  

In-Depth Analysis: Technical

• · Forex Trading Strategies - Kneejerk sell-off in USD on big Fed cut. Will the sell-off last? by Saxo Bank
• · Wakeup Call on Forex Markets - US Stocks Remained Lower After Fed rate cut by Saxo Bank
• · Weekly Update - The Federal Reserve unexpectedly slashed interest rates by 0.75% today by Union Bank of California
• · Daily Market Report: Forex - The Fed may cut rates before the FOMC meeting by ICICI Bank
• · Mid-Day Forex Technical Report - Markets Reverse after Fed's Emergency 75bps cut by ActionForex.com
• · Daily Forex Outlook - Markets were turned on its head following the emergency 75bps rate cut on Tuesday by Easy Forex
• · Daily Forex Strategy Briefing - Dollar Falls on 75 Basis-Point Rate Cut by CMS Forex
  
  

In-Depth Analysis: Related Markets

• · The Commodities Report - Lower U.S. interest rates recover crude oil and base metals by KBC Bank
• · Commodities Morning Briefing - The Fed comes to the rescue by Jyske Bank
• · Sunrise Market Commentary: Currencies - Euro rebounds on Fed action by KBC Bank
• · London Bullion Report - Gold holds gains following Fed related rebound by The Bullion Desk
  
  

Related News

• · INTERVIEW: Fed Rate Cut To Lift Stocks From Lows - Merrill (Dow Jones)
• · GBP/USD: The Dollar sank after emergency rate cut by the Fed (FXstreet.com)
• · IMF says US rate cut was 'appropriate and helpful' (Thomson Financial News)
• · Fed cut adds pressure on China policymakers - Standard Chartered (Thomson Financial News)
• · Indonesian central bank says Fed rate cut eases concerns about US economy (Thomson Financial News)
• · Oil prices mixed in Asian trade after surprise Fed rate cut - UPDATE (Thomson Financial News)
• · US dollar off highs against yen after surprise Fed rate cut (Thomson Financial News)
• · US dollar lower against sterling, euro after Fed emergency rate cut (Thomson Financial News)
• · Rate cut spooks market (Thomson Financial News)
• · What the Fed's rate cut means (Thomson Financial News)
• · Fed cuts rates sharply, other central banks under pressure to follow (Thomson Financial News)
• · Fed's next rate cut, 50bp in March - ING economist (Thomson Financial News)
• · Fed cuts target funds rate to 3.50 pct in wake of global market crash (Thomson Financial News)
• · Fed funds futures suggest another rate cut next week a near certainty (Thomson Financial News)
• · Fed Rate Cut Has Little Impact On Views Of EU Fin Mins (Dow Jones )
  
  

Analysts Comments

• · Joshua Shapiro, chief economist at MFR:
  "Lets face it, cutting by 0.75 pct today rather than in eight days at the regularly scheduled FOMC meeting is meaningless in terms of the fundamental economic outlook. While a deteriorating economy obviously argued for easing at the upcoming meeting (0.50 pct or 0.75 pct was viewed as a done-deal by markets), there can be no doubt that the timing of this mornings move is aimed at supporting global financial markets after yesterdays global equity meltdown." - Thomson Financial News
  
• · Divyang Shah, global strategist at IDEAglobal.com:
  "A 50 basis point cut is now a real risk at next week's meeting although if equity markets are a little calmer then maybe they can get away with doing 25 bps. The Fed will be cognisant of not disappointing financial markets so market pricing will be important." - Thomson Financial News
• · Derek Halpenny, senior currency economist at The Bank of Tokyo-Mitsubishi:
  "The implications for the dollar are slightly complicated. Risk aversion has in recent days come to the aid of the dollar ... however, further aggressive monetary easing will substantially erode any yield support for the dollar and hence we suspect the current risk aversion support for the dollar will give way to the negative yield developments that are now more apparent after this inter-meeting cut." - Thomson Financial News
  
  

Published on  Wed, Jan 23 2008, 13:34 GMT