Are things really that bad ? I don't think so....
The U.S. economy might tend towards a recession, based on which assumption there was a reduction in the funds rate from 4.25 to 3.5 percent, that is 75 basis points. This, BTW, marked the greatest funds rate since 1990.
But then, such a move was aimed two-fold :
- To prevent a recession
- To prevent a panic global stock sell-off.
Because, the greatest rate cut in 18 years , AMIDST ALL THIS TALK OF RECESSION IN 3-4 COUNTRIES, would unnerve all.
Result: More and more people would sell off.
Leading to, of course.....more stocks slumping.