Saturday, August 13, 2011

Interest Rate Further Reduced

Scribbled by E C Koch
ITITY Economics Reporter

New York NY

In an effort to retard extreme fluctuations of stock prices on Wall Street, Ben Bernanke, chairman of the Federal Reserve, has reduced the federal funds rate to below zero in hopes of encouraging borrowing and investment in the US.

Critics from both sides are questioning Bernanke’s decision but have, as expected, offered nothing in the way of an alternative.

The new interest rate, which is now at an historic low, has yet to attract any increase in borrowing as banks are still cautious to lend, stagnating the already glacial flow of capital.

With regard to the efficacy of paying banks to borrow through the fed Bernanke stated, “Though some rather acerbic skeptics are lambasting the decision, and I don't want to get anyone's hopes up, we expect that this will benefit economic recovery by approximately ¼ % over the next ten years, and may even help unemployment, but who really knows.”

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