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  • October 2007
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Fed Cuts Rate a Quarter Point, Dollar Drops

The dollar lost ground again today against other major currencies, a slight bounce occurred after the fed rate cut announcement but did little to help offset the day’s significant losses. The Fed announced a quarter-point rate cut that many investors had expected. The benchmark rate was cut from 4.75% to 4.5%.

Pulp Finance explains: “This also makes US treasuries less attractive to foreign investors which in turn lowers our ability to pay off our government overspending by increasing our debt. Its the equivalent of a company printing more stock shares and putting them on the market, this then lowers the value of every share held and eventually no one wants to buy the diluted paper.” The dollar index also hit an all time low suggesting spikes in inflation and decreased purchasing power.

View USD charts here:

USD vs CAD — beyond parity, USD vs EUR, USD vs GBP, USD vs CNY (CHINA)

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