The US Federal Reserve, declaring that increased economic uncertainty poses risks for US business growth, announced yesterday that it has approved a half-percentage point cut in its discount rate on loans to banks.
The action was the most dramatic effort yet by the central bank to restore calm to global financial markets which have been roiled in the past week by a widening credit crisis.
The decision means that the discount rate, the interest rate that the Fed charges to make direct loans to banks will be lowered to 5.75 percent, down from 6.25 percent.
The Fed did not change its target for the more important federal funds rate, which has remained at 5.25 percent for more than a year.
With worries about credit taking the Dow Jones industrials down by sometimes hundreds of points a day the past few weeks, investors seem to be have been trying to force the US central bank into giving them the interest rate cut they want -- and well ahead of the Federal Reserve's next meeting on Sept. 18.
In good times, it's not readily apparent to the casual observer that the central bank is actually one of the biggest underpinnings of the stock market. But when the market is squeezed and wants help, it is often the Fed that gets the call for some sort of lifeline.
Derrick Wulf, a portfolio manager, said some investors balked at comments on Thursday from St. Louis Federal Reserve president William Poole that the central bank wouldn't need to intervene in the stock market short of a calamity.
"Some people's reaction to that was `You want a calamity, you'll get a calamity,'" said Wulf, who works at Dwight Asset Management Company in Vermont.
Whether the market's drop since last month is viewed as a healthy pullback from new highs that came too quickly or the start of a broader retrenchment, some analysts contend a rate cut by the Fed would mean the bank was acquiescing to investors burned by risky bets. Many of the investments they made that are now regarded as questionable are made up of mortgages from borrowers with weak credit that were bundled together and sold off to investors. But the concerns about failing subprime loans have spilled beyond that sector of the market, making access to credit more difficult for everyone.
"The equity market seems to be pushing the Fed at the moment," said Andrew Clare, a professor of asset management at London's Cass Business School.
"I don't think the Fed should have to come in and bail out those institutions that were lax. Otherwise, that creates a tremendous moral hazard," said Clare, a former analyst at the Bank of England.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained