At their October meeting, Federal Reserve policy makers unanimously approved leaving the overnight bank lending rate unchanged because of slowing economic demand and an easing of inflation pressures.
A. Vinay Kumar, a professor of finance at the Indian Institute of Management in Lucknow (IIML), says the easing of inflation is "the most heartening story of all".
The easing of inflation worries smooths the path for further interest rate cuts from the People's Bank of China, after three such cuts since mid-September.
Stocks made a strong move higher Monday as a new spate of merger activity and a surprising rise in home sales restored investors' confidence in the economy and eased fears of inflation and higher interest rates.
But, in recent months, a weakening of economic indicators and easing of underlying inflation pressures (falling oil, food and commodity prices) have led the central bank to take out its scissors and slash the borrowing rate (see: "An Ominous Signal From The Bank Of England").
BLOOMBERG NEWS Investors Sell Inflation-Protected Treasury Securities | A fall in gasoline prices has eased investors' fears of inflation, The Wall Street Journal writes.
The upturn has, however, been gradual, in part because policy makers have been eager to steer the economy toward more modest expansion in the hope of easing the risks of inflation, potential loan defaults and inefficient investment.
On Aug. 8, the Federal Reserve kept interest rates unchanged for the first time in more than two years, easing immediate fears of inflation.
But assuming interest rates stay at their current 0.5percentt and the bank achieves its £175 billion ($288 billion) quantitative easing target, "the risks of inflation being above or below the 2percenttargetet at the two-year horizon are broadly balanced".
But assuming interest rates stay at their current 0.5percentt and the bank achieves its £175 billion quantitative easing target, "the risks of inflation being above or below the 2percenttargetet at the two year horizon are broadly balanced".
