Decreasing Banking Rates of US Federal Reserve System Will not Resolve Crisis in Market of Mortgage Crediting
Azerbaijan, Baku /corr. Trend A.Badalova / The economist of ATON Broker investment company, Vladimir Osakovski, believes that decreasing the banking rates of the Federal Reserve System of the USA will not totally resolve the crisis in the market of the mortgage crediting in USA.
"More time is required to fully eliminate its negative results - until the period when the investors fully restructure their assets," Osakovski said.
The rapid growth of the Euro in relevance to the USD over the recent days has led to the rapid decrease of the banking rates of the Federal Reserve System of the USA on 18 September. The rates were decreased by 0.5% to stimulate the economy of the USA which is under the threats of the economic fall due to the large crisis in the market of mortgage crediting. This decision decreased the profitability of the assets numbered in the USD.
"The direct impact of the decrease in the banking rates is the reanimation of the financial markets practically all over the world, particularly in the developing markets. In addition, the fall of the dollar has caused the price increase for oil and gold," Osakovski said.
According to the expert, these tendencies will be continuing in the short-term outlook. European Central Bank's refusal to increase its banking rates may assist in their continuation.
After the crisis in the mortgage crediting, the European Central Bank stopped increasing the interest rate and does not intend to increase the banking rate more than 4% by the beginning of the next year, Reuters reports.
According to the economist, the rapid drop of the dollar and the increase of oil prices may result in the acceleration of inflation in the USA. However, it will face reaction of the Federal Reserve System to increase the banking rates. "If it takes place the effect of changing the rate of the dollar and financial markets will be opposite and it may cause a new global crisis," Osakovski said.