Wednesday, October 31, 2007

Fed Policy

Fed has just cut rates by 25 basis points (both its Fed fund and discount rate). The markets appears to be flat ( atleast right now) probably because of the dissenting voice and the renewed concerns of inflation expressed by the Fed.

Well from the statement issued by Fed it looks as if they would pause (which is the right thing to do). Now if the Fed cuts more in December that would be surely out of the concern of a serious slowdown in US which would not argur well for the world economy as a whole. The effect on the emerging markets would be visible tommorrow. But my sense is that the EM's are not going to go very high from here, probably a little more and thats about it-------

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