Gold News

Fed cuts rates by 0.25%

Last night (October 31st) the Fed made its highly-anticipated move on interest rates, slashing another quarter point off the lending level and unleashing waves of market response.

Oil experienced one of the most dramatic after-shocks, shooting up above $96 per barrel and bringing the feared $100 crude oil asking prices ever closer.

Aiming to ease mortgage repayments and keep growth ticking over through easier lending, the rate cut was expected by many and anticipation of it had already coloured recent trading.

Also expected was a subsequent drop in the value of the dollar, with the greenback reacting to the new credit prospects with a fall against major currencies, hitting 26-year lows against the pound sterling.

While shares have reacted strongly to the news, many are skeptical of what may only temporarily stem market woes, with the effects of the sub-prime defaults on the large construction industry running deep.

The International Herald Tribune claimed that market uncertainty would soon ensue, as the cuts may buoy shares in the short-term, but "will not cure problems in the ailing housing market, which are still expected to drag well into next year".

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