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Business News- Times Now<http://forums.investorline.co.in/aggregator/sources/106>- Thu, 10/30/2008 - 15:46 p align=justifyThe latest interest rate cut in the US has sparked speculations that a number of major economies across the world, including the US, Japan, England and Australia, are moving towards a zero-per cent regime, but bankers differ about India. The rates have not been below the current level of one per cent in the US in the past five decades, but Japan had kept a zero-per cent rate policy for most of the time since 1999 till March 2006.brnbsp;nbsp;nbsp;nbsp; brThe US central bank, the Federal Reserve, yesterday October 29, cut its benchmark rate by 50 basis points to one per cent, while the Bank of Japan is meeting tomorrow to review its rate. There are expectations for a cut in Japan's rate from its existing level of 0.5 per cent -- which is already the lowest for any industrialised economy in the world.brnbsp;nbsp;nbsp;nbsp; brWhile expectations are building up for further rate cut in India as well, the bankers here believe that a zero-level rate does not seem likely even remotely. That (zero per cent interest rate) looks very difficult in India. Given the liquidity situation and macroeconomic factors, interest rate below one per cent seems a highly unlikely proposition, UCO Bank Chairman and MD S K Goel said.brnbsp;nbsp;nbsp;nbsp; brBut, it is not the case with the US and Japan, as well as some other economies where a zero-interest rate is being talked as quite a possibility in the current economic scenario when borrowers are hard to find and liquidity is not enough.brnbsp;nbsp;nbsp;nbsp; brUnder a zero interest rate policy, which is also known as Quantitative Monetary Easing Policy, a central bank uses money supply, rather than interest rate, as the main monetary easing tool. When Japan slashed its benchmark rate to zero for five years between 2001 and 2006, it was mainly to fight deflation concerns and revive economic growth. brnbsp;nbsp;nbsp;nbsp; brHowever, a zero benchmark rate does not guarantee nil interest cost for consumers or corporate borrowers. It applies only to the banks parking their funds with the apex bank and borrowing from each other. The interest rates applicable to the consumers and corporate customers, however, tend to decline considerably in such a scenario.brnbsp;nbsp;nbsp;nbsp; brThe expectations for a zero rate are getting a boost from the fact that central banks across the world are nowadays taking concerted efforts to cut their benchmark rate in a bid to fight the global credit crisis. At least a dozen major central banks across the world have slashed their benchmark rates to sub-five per cent level in the past few days, while more rate cut decisions are expected after Fed's decision last night.brnbsp;nbsp;nbsp;nbsp; brPrior to this, Fed had cut its rate to 1.5 per cent on October 8 in a coordinated move with many other central banks across the world, including Bank of England, European Central Bank, Categories: Business<http://forums.investorline.co.in/aggregator/categories/4>, Capital Market <http://forums.investorline.co.in/aggregator/categories/5>, Corporate News <http://forums.investorline.co.in/aggregator/categories/11>, Economy<http://forums.investorline.co.in/aggregator/categories/12>, India <http://forums.investorline.co.in/aggregator/categories/43>, Industry<http://forums.investorline.co.in/aggregator/categories/20>, Inflation <http://forums.investorline.co.in/aggregator/categories/21>, International Business <http://forums.investorline.co.in/aggregator/categories/23>, International News <http://forums.investorline.co.in/aggregator/categories/24>, USA<http://forums.investorline.co.in/aggregator/categories/46> Create your free blog and express yourself - http://iwebslog.com News - http://central.iwebslog.com --~--~---------~--~----~------------~-------~--~----~ Get latest market updates & search internet right from your browser-download our toolbar here- http://investorline.ourtoolbar.com/ Visit our site at – http://investorline.co.in/ Newsroom: http://newsroom.investorline.co.in/ Learning Center- http://learning.investorline.co.in/ Mutual funds - http://mutualfunds.investorline.co.in/ Life Insurance - http://insurance.investorline.co.in/ Investor Journal - http://research.investorline.co.in/ Newscatcher- http://catcher.investorline.co.in/ Interested in Financial Planning-Let us Contact you- http://spreadsheets.google.com/viewform?key=pb_z4f1_zGMg4iBBFT3-SWQ&email=true If you like the site then promote it here- https://www.freetellafriend.com/tell/?url=http://investorline.co.in/blogs/news Create your own free blog on- http://investorline.co.in/blogger Visit this group at http://groups.google.com/group/india-investor -~----------~----~----~----~------~----~------~--~---
