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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Ahda who wrote (3119)7/20/2001 1:09:50 PM
From: Robert Douglas  Read Replies (1) of 3536
 
Hi Darleen,

I'm having a difficult time deciding whether or not the Fed's easings will have much of a stimulative effect on the economy. What do you think?

As I see it, there aren't many areas where lower rates will help that aren't already doing well, e.g. housing, consumer spending, autos.

It may give some corporations a little debt relief which will help the bottom line, but not enough to send them on a capital spending spree, IMO.

So in total, I don't see much demand added to the economy from lower rates, especially since two of the avenues of stimulus that lower rates usually bring, lower dollar and lower long-term rates, didn't happen this time.

And we can't forget that there is an offsetting result of lower rates and that's interest income. Money market funds and CDs are yielding much less than they were at the end of last year. This makes some people poorer.

Any thoughts?
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