Rama Krishna Vadlamudi, MUMBAI. www.scribd.com/vrk100 Nov. 14
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The European Central Bank (ECB) has on April 2
cut its lending rate by25 bp to 1.25 per cent. This is the sixth time ECB has lowered its key ratesince October 2008, when it stood at 4.25 per cent.
US unemployment rate has increased to 8.5 per cent in March 2009, thehighest level since 1983
The Indian Government would buy bonds worth USD 10 billion as its contributiontowards increasing the capital base of IMF by USD 500 billion announced at theG-20 meeting in London early this month. India’s share in close to 2% in theFund and as such it is contributing 2% of the new capital base to the IMF.
India’s merchandise exports declined 33 per cent in March 2009 to touch USD11.52 billion, the lower performance in three months of fourth quarter of financialyear 2008-09. This is the sixth month in a row that exports registered a decline.For the full year 2008-09, merchandise export grew at only 3.4 per cent in dollarterms to touch USD 168.70 billion. This is the first time in a decade thatmerchandise exports recorded a single-digit growth.
The current problem with the US is that US citizens have increased their savingsin times of a an economic crisis. This is further aggravating the slowing USeconomy.
The European Central Bank has cut its main interest rate by 25 bp to one percent which is a record low since the ECB’s inception in 1998
Federal funds rate and discount rate
: The US federal funds rate, in a practicalsense, is similar to inter-bank call money borrowings whereby banks/financialinstitutions lend their overnight surplus funds to other needy banks. The officialdefinition of fed funds rate is: the interest rate at which depository institutions(usually banks) lend balances at the Federal Reserve to other depositoryinstitutions overnight. The current fed funds rate is 0% to 0.25%.The discountrate is the rate charged to commercial banks and other depository institutions onshort-term loans (usually overnight) they receive from their regional FederalReserve Bank’s discount window. The
is an instrument ofmonetary policy that allows eligible institutions to borrow money, usually on ashort-term basis, to meet temporary shortages of liquidity caused by internal orexternal disruptions. The current discount rate is 0.50% (for primary credit).Because primary credit is the Federal Reserve's main discount window program,the Federal Reserve at times uses the term
to refer to the