U.S.: low interest rate scenario for now

U.S.: low interest rate scenario for now

With a strong move, the Federal Reserve overcame expectations last week and cut interest rates by 75 basis points to 0.25%. Rates should stay low for most part of 2009, since the Fed confirmed its desire to restart the economic growth in the shortest period of time. In effect, recession has worsened in the final part of 2008: more people are out of work, consumes are slumping and housing downtrend continues. In November, housing starts fell almost 19% month on month and are down 47% on a yearly basis by an estimate of the Commerce Department. Permits declined almost 16% and more weakness is expected in the near future. As a result, the Gross Domestic Product (GDP) could slump again in the last three months of 2008, probably more than the tiny move registered during the previous three months.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.