HiFX: Foreign Exchange Specialists

• Headlines

October 29, 2008

The Federal Reserve has further eased monetary policy today by 0.50% taking the Fed Funds rate to 1.00%, last seen in 2004.  The accompanying statement was exceptionally down beat in contrast to past statements with the Fed noting that recent policy actions “should help over to improve the credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain.” The Fed also mentions the slowing economic activity in foreign economies dampening the prospects for US exports. The Fed rarely mentions external demand and sets the tone of the current global financial crisis. Market reaction was limited in response to this latest FOMC meeting as there as there were little or no surprises in the release.