Gold News

Fed minutes leave outlook unclear

Much anticipated comments from the Federal Reserve over the September decision to cut rates were yesterday unveiled, with markets reacting bullishly to news of a unanimous decision having brought about the cut.

Minutes of the September policy meeting revealed that the Fed's council all voted in favour of a cut due to the mounting sub-prime crisis and fears of a wider housing crash, giving markets an immediate boost in the shape of new prospects for further rate cuts.

But the unanimity shown at the Fed may not translate into anything more than a short-term rally, with the major trade indexes hitting new session highs in the final hour of Tuesday trading, but uncertainty remaining as to where rate cuts would lead.

Analysts at Action Economics told Market Watch that markets were already trying to adjust but that uncertainty reigned: "The FOMC minutes did not shed fresh light on the Fed's monetary policy outlook.

"As a result, it appears the foreign currency market remains somewhat skewed toward another rate cut at some point this year."

Meanwhile, economic indicators from leading organisations showed that attempts to remedy problems through interest rate cuts may not be enough, should the Fed again choose this path.

Leaked reports from the International Monetary Fund (IMF) have shown forecasts which revise American growth for 2008 down to 1.9 per cent from the previous figure of 2.8.

BullionVault-cube-18312686-ADNFCR

See all articles by Gold Bug here.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals