Why lower interest rates may not solve this
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interest rates March 17th, 2008Prior to the Fed’s Sunday night actions, the consensus looked for a 50 basis point Fed rate cut, but markets now have a 100 basis point cut discounted, in line with calls on Friday in the wake of the Bear Stearns liquidity injection.
It has to be added the 25 basis points discount rate cut last night bordered on the gratuitous, and to some extent undermines the tenor of the rest of the measures. i.e. sustaining a 25 basis point margin over Fed Funds appears…
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