The US Federal Reserve slashed its target interest rate to nearly zero on Tuesday and is taking a number of other unprecedented moves in an effort to battle a financial crisis and recession. Consumers trying to buy a house or finance a car loan could be the big winners, but analysts caution that any upturn in the US economy 1s still months away.
The Fed announced that it was reducing its target for the federal funds rate to between zero and 0.25 percent, down from 1 percent, a level that was already the lowest target rate in a half century.
And the central bank pledged to use “all available tools” to fight the current downturn. It said it was likely that rates would be kept at “exceptionally low levels” for some time to come.
“The Fed has taken some very historic steps and for the first time since this crisis began, they have gotten ahead of expectations instead of trailing behind them,” said Mark Zandi, chief economist at Moody’s Economy.com.
The Federal Reserve’s radical step prompted cuts elsewhere yesterday and threw the spotlight onto both a Bank of Japan (BOJ) meeting and other available policy measures.
Hong Kong followed the Fed with a full point rate cut to a record low of 0.5 percent and Kuwait’s central bank reduced its key policy rate by a half-point to 3.75 percent.
Norway’s central bank was expected to cut its main rate by 100 basis points to 3.75 percent later yesterday although a number of economists forecast an even bigger reduction.
The Fed’s move could push the BOJ to cut rates from 0.3 percent tomorrow.
Minutes of this month’s Bank of England (BOE) meeting showed a 9-0 vote for this month’s full-point UK rate cut and that an even bigger reduction was discussed but then rejected for fear of undermining any lingering confidence about the economy.
Central banks across the globe are slashing rates and eyeing unorthodox policy measures as the worst financial crisis in 80 years propels many countries into recession.
The BOE policymakers said further measures to underpin bank lending growth would be needed as well as rate reductions.
Initiatives to foster bank lending have already pushed the Fed’s balance sheet to US$2.2 trillion from US$887 billion. Some analysts say it could eventually top US$3 trillion.
The rapid expansion amounts to a form of quantitative easing, a policy pursued by Japan to expand the supply and circulation of money after it was forced to lower rates to zero.
The prospect of effectively littering the financial system with dollars pushed the US currency to a two-and-a-half month low.
A Fed official said on Tuesday it was not pursuing Japanese-style measures but was buying securities and making loans to improve mortgage and credit market conditions, although that also happened to expand its balance sheet.
Also See: US dollar at 13-year low against yen
Also See: NT dollar strengthens to six-week high
Taiwan aims to open 18 representative offices and seven Taiwan Tourism Information Centers worldwide by next year to attract international visitors, the Tourism Administration said on Saturday. The agency has so far opened three representative offices abroad this year and would open two more before the end of the year, it said. It has also already opened information centers in Jakarta, Mumbai and Paris, and is to open one in Vancouver next month and in Manila in December, it said. Next year, it would also open offices in Amsterdam, Dubai and Sydney, it added. While the Cabinet did not mention international tourists in its
EYES AT SEA: Many marine enthusiasts have expressed interest in volunteering for coastal patrols, which would help identify stowaways and illegal fishing, the CGA said Six thousand coastal patrol volunteers are to be recruited for 159 inspection offices to enhance the nation’s response to “gray zone” conflicts, Coast Guard Administration (CGA) sources said yesterday. Volunteer teams would be established to increase the resilience of coastal defense systems in the wake of two unlawful entries attempted by Chinese over the past three months, Ocean Affairs Council Minister Kuan Bi-ling (管碧玲) said. A former Chinese navy captain drove a motorboat into the Tamsui River (淡水河) in Taipei on the eve of the Dragon Boat Festival in June, while another Chinese man sailed in a rubber boat into the Houkeng
NEXT LEVEL: The defense ministry confirmed that a video released last month featured personnel piloting new FPV drone systems being developed by the Armaments Bureau Taipei and Washington are pushing for their drone companies to work together to establish a China-free supply chain, the Financial Times reported on Friday. A delegation of high-level executives and US government officials were yesterday to arrive in Taipei to discuss with their Taiwanese counterparts collaboration on drone technology procurement and development, the report said. The executives represent 26 US manufacturers of drone and counter-drone systems, while the officials are from the US Department of Commerce and the US Department of Defense’s Defense Innovation Unit, along with Dev Shenoy, principal director for microelectronics in the Office of the Under Secretary of Defense
‘ANONYMOUS 64’: A national security official said that it is an attempt by China to increase domestic anti-Taiwanese sentiment and inflame cross-strait tensions The Ministry of National Defense’s (MND) Information, Communications and Electronic Force Command (ICEFCOM) yesterday denied accusations by China that it had undermined regional security by carrying out cyberattacks against targets in China, adding instead that Beijing was responsible for raising tensions and undermining regional peace. The Chinese Ministry of State Security on WeChat accused a hacker group called “Anonymous 64” of targeting China, Hong Kong and Macau starting earlier this year through frequent cyberattacks. The group carried out cyberattacks to seize control of Web sites, outdoor electronic billboards and video-on-demand platforms in China, Hong Kong and Macau, it said, adding the hackers’