Thursday, 11 November 2004

US and S Korean interest rates move in opposite directions

What a contrast in interest rate direction.

Fed raises key rate quarter point to 2.0 percent
US Federal Reserve policymakers, heartened by a burst in new jobs in October, raised key short-term interest rates Wednesday for the fourth time in a row. The key federal funds target rate, which commercial banks charge each other overnight, rose to 2.0 percent from 1.75 percent, by unanimous vote of the Federal Open Market Committee (FOMC).

South Korea lowers key interest rate to 3.25 percent.
South Korea's central bank, in a surprise move, cuts its key interest rate for November by 0.25 percentage points to 3.25 percent in a bid to boost a sluggish economy.

Of course, it's a reflection of how US demand is still perceived as strong while South Korean demand is not. The question is whether US demand will remain as strong as we head into 2005.

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