The reductions have not met the expectations so far, as it was thought that the Federal Reserve might reduce the rates of interest by at least 1%. The FTSE 100 Index of London had gone up by 3.5% in expectation that the rate of reduction would be 1%.
In the Wall Street the Dow Jones Industrial Average had gone up by 420.41 points to 12,392.66. That is equivalent of 3.51%. The Federal Reserve believes that the situation for economic activities is less impressive than before.
They have also said that the financial markets in the United States have not been doing well and the situation of the housing market is going to have a significant impact on the United States economy in the long run. This decrease follows a trend that has been set in motion since the month of September.
All this while the United States economy has been trying to deal with the aftermath of the sub-prime market crisis. Since the month of June, 2005 the rates of borrowing have been the least in the United States. In the initial phase of 2008 the Federal Reserve had lowered the rates by 1.25% in a period of almost two weeks.
The decrease in the interest rates has brought about an increase in the value of the Canadian dollar. This was the first time it had happened in three days. Presently, 1 US dollar is worth 99.36 cents, which is equal to an increase of 0.4%.
As a result of this decrease, the New Zealand dollar and the Brazilian Real have been benefited as well. However, it has been said by the financial experts that the Bank of Canada would have to reduce the interest rates in the future as well. At present the benchmark rate in Canada is 3.5%.
