Fed drops rate to 1%
As was widely anticipated, the Feds have dropped the Fed Funds Rate to 1%. Rate cuts, coupled with other measures, seem to be gaining some traction at lowering LIBOR rates to which more than $360 trillion of financial products are tied.
SIBOR and SOR still volatile
Continuing the wild ride of the past few weeks, SOR began the week at 1%, soaring to 2.11% mid-week and finishing the week at 1.63%. SIBOR was slightly less volatile, ranging between 1.38% and 1.63%.
Fed Funds Rate down to 1.5% on Coordinated Rate Cuts
The Federal Reserve cut the Fed Funds Rate from 2% to 1.5% ahead of the FOMC meeting at the end of the month in a coordinated effort with the European Central Bank, the Bank of England and central banks in Canada, Switzerland and Sweden. This was to ease the economic effects of the worst financial crisis since the Great Depression.
Singapore interest rate roller coaster ride
The past few days have been the most volatile on all financial fronts, be it equities, exchange rate or interest rates. In Singapore, the 3 months SIBOR spiked to 2.23% due to “spillover from the US funding freeze and also the increase in risk aversion in the local interbank market”. The Monetary Authority of Singapore (MAS) had increased liquidity in the local money market in their effort to keep SIBOR in check.
SIBOR and SOR Jump
There has been a lot of volatility in the SOR and SIBOR the past few days, reacting to the jump in LIBOR as people are “afraid to lend to one another”. The 3 month SOR has broken through the previous high of 1.63 to hit 1.7, since i started tracking it in April.
Refinancing 901
I should be expecting a letter from my bank soon, telling me that the interest rate chargeable on my housing loan will be revised to 1.9%, with effect from September 1. This is a second time win for me, having my housing loan interest rate shaved by another 0.1%.
Predictions for the Fed Funds Rate tell us that it looks set to remain at 2% at least until October.
Inflation and money supply
So far i have become acquainted with the Federal Funds Rate, bonds and foreign exchange. It’s time to look at two very important topics – inflation and money supply. This article looks at some of the implications of events taking place on inflation and money supply.
Singapore interest rates rise
The 3 month fixing SOR has gone up 0.10% for 2 consecutive days. This is probably attributed to the rising US dollar (falling Singapore dollar). According to interest-rate parity theory, the interest rate has to rise to make up for a fall in the currency so that it maintains parity with another currency.