Global Interest Rates

Chart of the Week for November 9 - November 15, 2007

The U.S. Federal Reserve cut the Fed Funds Rate in September 2007 by 0.50% and in October 2007 by 0.25%. The Fed Funds Rate is a key interest rate which the US Central Bank (the Federal Reserve) uses as a tool to help implement monetary policy in the US. If the Fed believes that the economy is growing too quickly they may implement a tightening policy by raising interest rates, which makes borrowing more expensive and hopefully slows the pace of economic growth.

While U.S. Federal Reserve has cut rates lately, it is interesting to see that other key interest rates around the world have held steady for now. The Bank of England met just yesterday (November 8) and decided to hold interest rates firm. The Bank of Japan meets on Monday (November 12) and is expected to keep interest rates firm. Analysts believe world central banks are seeking further evidence on the effects of inflation concerns (e.g. record oil prices and higher food costs) and possible weakness in the U.S. economy before making any changes.

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