Federal Reserve Delivers 75bps Rate Cut
March 18, 2008
In a widely expected action today, the US Federal Reserve cut both the Federal Funds and Discount rate by 75bps. The Fed was under increased pressure to ease recently as news of Bear Stearns near collapse weighed on the global markets, sparking fears about the stability of major financial institutions. The Fed also opened up the discount window to large financial institutions, encouraging them to utilize the facility to meet liquidity requirements. Wall Street rallied on the news, with the Dow posting over a 4.00% gain on the day, as risk appetite flowed back into the markets. The US Dollar showed notable strength after the release against a basket of currencies, underpinned by the flow of US Dollars back into US equity markets and improved sentiment.