The US Federal Reserve cut interest rates by 75 basis points to 2.25 per cent yesterday, a smaller reduction than many in the markets had expected – and a sign the central bank believes monetary policy alone will not solve the credit crisis.
In a statement, the US central bank said the “outlook for economic growth has weakened further” and said “downside risks remain” – leaving the door open to further rate cuts at subsequent policy meetings.
But the Fed also made it clear that policymakers did not cut rates by 100 basis points as many investors expected because of ongoing concerns about inflation.
“Inflation has been elevated and some indicators of inflation expectations have risen,” the Fed said. It said policymakers expect inflation to moderate, but believe “uncertainty about the inflation outlook has increased”.
After a day of gains, markets showed their disappointment that the cut was not bigger, giving up some of their advances.
The Fed decision reflects policymakers’ determination to signal that they are not ignoring inflation. Officials worried that if they cut rates too far, the bond market could rebel, pushing up long-term interest rates and with them mortgage rates.
In recent days the US central bank has taken aggressive measures to boost the supply of liquidity to markets, including a new emergency finance facility for investment banks.
昨日早些时候，美国股市和信贷市场大幅上涨，雷曼兄弟(Lehman Brothers)和高盛(Goldman Sachs)好于预期的业绩，以及对美联储大幅降息的预期，提振了投资者人气。
Earlier, stocks and credit markets rallied sharply as investors were buoyed by better-than-expected results from Lehman Brothers and Goldman Sachs and anticipated a big Fed rate cut.