For the seventh times, the Fed has decided to cut its interest rates to avoid a potential recession, even if some experts already consider that the recession has started in the US. The interest rate went from 2.25% to 2% which means the rates have drop from 3.25% since last September. This should be a new step to boost the growth because the economic activities remain weak in spite of the US government's tax rebates, which have just started reaching consumers to boost their spending. This is expected to be the last step from the government to "buffer the economy from a credit crunch and housing downturn".
The US economy is going through " a tough time" said the President Bush. Indeed, all the economic factors are not good in the American economy: the US GDP meets some difficulties to progress (0.6% since the beginning of 2008), the consumer spending is at its lowest level since 2001, there is no more business investment and home building continues to fall, recording the biggest drop in 26 years. If the Fed is trying to struggle them with its "economic stimulus plan" to create growth, the Fed should remember that meanwhile, the rise of the prices of energy and commodities represent serious downside risks for growth as they represent inflations signs.
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