Fed cuts rates…can it drop below 1%

The Federal reserve dropped key interest rate from 1.5% to 1% in a bid to boost economic growth and increase the availability of credit. This cut follows a 50-basis-point reduction earlier in the month. The Fed’s statement points to tight credit amid market turmoil, as well as declines in consumer spending, business equipment spending, and industrial production. The Fed also expressed a new concern about weakened economies abroad "damping the prospects for U.S. exports." The big question is whether rates can go below 1%? The last time rates were at 1% was between June 2003 and June 2004.

…So does China, South Korea

China’s Central Bank cuts deposit lending rates by 27bps to 6.66% from 6.93%, the People's Bank of China stated on its web site. The deposit rate drops to 3.60% from 3.87%. This is the third time in two months China has cut rates.

Bank of Korea lowered the seven-day repurchase rate to 4.25%. This is the largest-ever rate reduction following last week`s carnage in stock and currency markets. Bank of Korea Governor Lee Seong Tae lowered the seven-day repurchase rate by 75 basis points to 4.25%. This was the largest-ever rate reduction in its history, following a more than 20% decline in South Korean shares in the past week. Bank of Korea also cut rates on special loans for small and medium-sized companies to 2.5% from 3.25%, the central bank said. It will also accept bonds issued by commercial banks as collateral in its money-market operations.

…And Bank of Japan too cuts rate

The Bank of Japan cut its benchmark interest rate to 0.3%. The deciding vote was cast by Governor Masaaki Shirakawa to lower the key overnight lending rate from 0.5 % to 0.3%. Four of the eight board me