Federal Reserve To Be More Responsive

The Federal Reserve has announced that it intends to keep a close eye on individual economic indicators as they are released over the course of the month, to enable it to respond promptly to any changes in the economic climate.

Board Governor Kevin Warsh is quoted as saying it is the Reserve’s intention to stay in line with indicators from the market in order to determine the best course of action for interest rates next time around, to help ensure markets are presented with the best possible chance of ongoing stability and long term recovery.

He also added that the Federal Reserve would not engage in rescuing any specific banks that came for help, unlike the Bank of England which has come under fire this week for its unprecedented support of lender Northern Rock.

By taking a focus on growth, employment and inflation figures over the month, the Federal Reserve has proposed to engage in a more ‘grass roots’ interest policy making process over the coming months, to enable it to help nurse the US and the global economy ultimately back to health.

The US economy has suffered rocky times over the course of this year so far, starting with a slowdown in housing sales and an increase in risky, high yield/high risk sub-prime mortgages.

As the Federal Reserve moved to raise interest rates to control inflation, the number of sub-prime borrowers finding themselves in trouble skyrocketed, which has led to an unprecedented level of repossessions, leading to credit crunch conditions across the globe.

Many analysts have praised the Federal Reserve’s move to slash rates by a half a percent this week, which is designed to take some pressure off the sub-prime sector and allow banks, and the economy, to regain some momentum to carry forward on the road to recovery.

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