Global Interest Rates
Chart of the Week for June 20, 2008 - June 26, 2008
While the U.S. Federal Reserve ("the Fed") aggressively cut the Federal Funds Target Rate in the 4th quarter of 2007 and 1st quarter of 2008, it is interesting to see that other key interest rates around the world held steady or only declined modestly over the same time period. For the 2nd quarter of 2008, these same rates have remained relatively stable. The Federal Funds Target Rate is the key interest rate used to help the Fed implement monetary policy in the U.S. If the Fed believes the economy is growing or inflation is rising too quickly they may implement a tightening policy by raising interest rates. This tightening tends to make borrowing more expensive and hopefully slows the pace of economic growth and inflation. Analysts believe world central banks are seeking further evidence on the affects of inflation concerns (e.g. record oil prices and higher food costs) before making any changes.
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