One of the ways that U.S. is seeking the recovery from the recession is by lowering interst rate, known as the expansionary monetary policy. Decrease in the interst rate would give incentive for people to spend rather than save which is a Keynesian approach of looking at the econmy, and it would also help the firms to invest more by borrowing more credit from financial institutions.
This policy is not only used in U.S. but also used in South Korea. According to The New York Times, South Korea's central bank anounced to cut the interest rate in its history in an attempt to cushion it seconmy from the global down turn. Similarly in Taiwan and China, the interst rate has been cut to 2% and 2.4% respectively.
The Asian Development Bank presented the expected frowth of Asia's dveloping nations to slow to 5.8% from 9%. As the countries are quickly seeking for ways to increase production and initate growth in the economy, such policies that allows more capital flow, incrase in availabilty of credit, and growth in the econmy are currently implemted.
1 comment:
If the Fed follows through with its plan then the United States will lower its rate to 0.5%, isn't that a record too?
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