Filed under: International markets, Forecasts, Other issues, Federal Reserve, Recession

As criticism mounted Friday that the U.S Federal Reserve may have at least partially ‘jumped the gun’ with a large 75-basis-point rate increase after U.S. stock markets plunged early Tuesday, economists and analysts say the Fed is unlikely to deviate from its easing monetary policy path, even though some evidence suggests Societe Generale’s unwinding of a rogue bank trader’s unauthorized trades may have contributed to Tuesday’s plunge.

The Dow plunged more than 400 points in the first hours of trading Tuesday, following massive sell-offs in Asia in Europe on Monday, and the Fed, concerned about the impact of potential market crash on an already weakened U.S. economy and financial system, responded with an emergency-meeting, 75-basis-point rate cut for both the Fed Funds rate, to 3.50%, and the discount rate, to 4%.

Societe Generale factor

However, on Thursday Societe Generale, France’s second largest bank, announced that on Monday and Tuesday it had unwound trades of a rogue trader’s unauthorized — and losing — trades, which cost the bank almost $7.2 billion, The Associated Press reported.

Continue reading Societe Generale trader scandal unlikely to deflect Fed off easing course

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This entry was posted on Saturday, January 26th, 2008 at 6:40 am and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.