Future Ahead

In the face of global credit crisis, it is expected that Fed has to make further changes such as cut in the more important federal funds rate to maintain stability. The pattern of growth is likely to change showing a slow down. "Mark Zandi, chief economist at Moody's Economy.com, has trimmed his forecast to show economic growth of about 2.5% in the current quarter, down sharply from 4% in the April-June quarter. He said the fourth quarter is likely to be even weaker at around 1.5%" ('Fed surprises markets with half-point rate cut', 2007). The policies of rate-cutting could be more disturbing because of warnings about inflation...

The turmoil in the credit markets is not likely to be reduced overnight. The changes might be observed after a while however not without some of the negative repercussion. A lot also depends on the future moves by the Fed.