Interest Rate Cut To Spur
High-Tech Investment
(01/03/01, 6:51 p.m. ET) By Mary Mosquera, TechWeb Finance
High-tech companies will see their borrowing costs decline with the Federal
Reserve's unexpected interest rate cut on Wednesday.
The action will also encourage long-term investment, analysts said.
The Fed funds rate for overnight bank lending was reduced to 6.0 percent
from 6.5 percent, where the Fed has targeted them since May. It was the first
rate cut in two years. The discount rate for bank emergency funds was trimmed
to 5.75 percent from 6 percent.
The Federal Reserve moved decisively and unexpectedly to shore up an
economy apparently deteriorating faster than expected.
Lower interest rates will enhance data growth, said William Hurley, analyst at
the Yankee Group in Boston. "The half-point cut in interest rates will allow
enterprises, service providers, and carriers to continue to make acquisitions
necessary to provide and grow services demanded by customers without going
into debt," he said.
"Anything that reduces the cost of capital can engender benefits and support
long-term investment," said Marc Brailov, spokesman for AeA, formerly the
American Electronics Association.
Steve Baker, analyst for market research firm PC Data, Reston, Va., said
lowering interest rates may help in PC sales |
