The consequence of FED’s decision regarding de rates

For the first time since 2002, the decrease of the american rate was up to 0,5% consequently the global rate of the American funds is now 4,75% which is quiet low and I am going to explain you this decision.

Actually 4 months ago things were very different, the sub prime crisis wasn’t existing !!!
The summer was very bad for the financials markets which lived a little crash, and thanks to the American funds who tried to calm down the market we escape or report a market crash.

Because we are not able for the moment to estimate this crisis, we are sure of one thing, by decreasing the rates and injecting money, the FED is reacting to save the market.
As we can see at the top of the page, this graph show the reaction of the markets when the medias report the decision of the American funds.

We can concluded about this graph that the media who convey the information as an essential role.
On the one hand there is the FED, which decided to decrease the rates, which is good at short term but it is also a message which means that the situation is very bad, moreover the American funds had planned in January to increase those rates.
On the other hand there is the central bank of Europe (BCE) which preferers to stick to what she had planned few months before. This decision do not help the financial markets but allow to fight against the inflation. But this decision his not good for the European company because the euro is becoming more strong and the dollar is becoming weaker, consequently European companies are less attractive.
Let’s take the example of Airbus which was giving a conference and were telling that if the parity of the euro – dollar would reach 1,45, Airbus would lose 1 more billiard of euro since the cost of the fret was firstly calculated with the parity of 1,35 dollar for 1 euro.