To tide over the effects of Recession, the Federal Reserve, the Central Bank of the USA, has slashed the rate of interest on loans, taken from the Federal Reserve, to zero. This seems like following the ten-year-old Japanese Model, in which rates of interest were also slashed to zero. The Federal Reserve has stated that the rates of interest taken from them would range between 0% to 0.25%. In other words, the US banks & other Financial Institutions will now practically get Interest Free Loan from the Federal Reserve. As a result of this step, the Investment Cost in the American Economy will be reduced & at the same time people will be encouraged to spent rather than save. The US Economists are of the opinion that they now expect the common people to invest in Share Markets, Mutual Funds etc rather than keeping money in the Banks. The experts are of the opinion that this process will slowly revive the US Economy. Economists are also of the opinion that the slashing of the interest rate will help India boost up her Export Trade since the slashing process will reduce the price of the dollar in relation to the rupee as well as other major currencies of the World. This will definitely help India to boost up her Exports.Contributed By:
Prof. Jayanta Mitra
(Globsyn Business School)
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