What the Fed did

Thursday 30 October 2008 - What the Fed did

Presented by Paul Donovan




+ What was the most important thing the Fed did yesterday? It may not be the rate cut (expected) but instead the provision of four additional swap lines to Korea, Singapore, Mexico and Brazil. This distinguishes countries with liquidity problems from countries with systemic problems.


+ The US rate cut statement left room for further easing. Our US team now look for another 50bp, though highlight the wide range of options available to the Fed. The BoJ (meeting Friday) took the unusual step of draining liquidity twice today, to keep rates over 0.5%.


+ Senator Obama blamed China's current account balance on the currency. Nothing to do with reckless US consumer spending, then? The raising of protectionist rhetoric is a concern as US unemployment rises and growth slows.


+ Reflecting the weakening of the world economy, our oil team have reduced their price estimates for next year and now forecast USD60 per barrel on average. This balances supply constraints with clear declines in demand.

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News & Politics

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