This is Doug Tengdin from Charter Trust with the Global Market Update for Tuesday, October 28th, 2008. Remember the Fed? We used to stop everything and watch. Not lately
It seems rather quaint to be talking about the Federal Reserve and interest rates. Kind of like soldiers coming back from a war zone being warned about various health risks. When you’ve looked at the end of the world, other issues pale in comparison.
But even if the credit crisis has been taking center stage, interest rates are important, if only as a signal. Because with the Fed acting as a clearinghouse for bank lending now, the Fed’s target rate will have a real impact on bank profits.
I know, why should we care? Well, I care because if the banks can earn a profit on low-risk investments, then they can pay back some of that $700 billion they’re borrowing. And if the Fed engineers some kind of quick recovery from this economic funk that we’re in, we can all breath again.
They’re meeting again today. Let’s hope their actions have some positive consequences.
Douglas R. Tengdin, CFA
Chief Investment Officer
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