If the economy slows down there is a possibility of generating second-round inflationary effects in the medium term by increased wage pressures. Nevertheless, he knows that the current level of Fed rate is decidedly low, so you must act as quickly as possible as the problem of the economic downturn has diminished. This sentence the end of the downward cycle of fees. Nor was there much point in continuing with the cuts because it is likely that Bernanke is thinking that whatever rate policy could do to ease the turmoil in the subprime sector, has already done. This does not mean that the storm has passed forever.
I understand that Bernanke should be sure that financial institutions still continue to feel the effects of the crisis and the announcement of losses will continue. Recent days have been very moved to U.S. financial institutions. Wachovia began the Executive Director and Standard & Poor’s downgraded the ratings of Merrill Lynch, Morgan Stanley and Lehman Brothers. Is that S & P three accounting firms face new write-offs.
So Morgan Stanley, lowered his rating of AA-to A +, while Merrill Lynch and Lehman Brothers were down from A + to A. The problems for U.S. financial institutions did not finish. Lehman Brothers is looking for fresh funds to recapitalize. For now, polls conducted in Korea and is said to SWF Korea Development Bank and Woori Financial Group, would be the potential contributors of capital. It is said that the capital increase that would be looking would be between U.S.