FED rate cut by 50 basis points

Sliding global markets got lifeline late on Friday when the US Federal Reserve cut its discount rate, or the rate at which it lends to member banks, by 50 basis points to 5.75 per cent.

The Fed said it did so as “the downside risks to growth have increased appreciably.

What the rate cut would doe is to allow banks and small institutions to borrow at a lower cost. This will address the liquidity issue and I think the global markets should bounce back.