(Aug 19): The widely expected 25-basis-point rate cut by the US Federal Reserve last month pretty much confirmed that low interest rates are here to stay. The cut in the benchmark federal funds rate to a range of 2% to 2.25% is the first since December 2008.
While the cut was lower than the 50bps that many had predicted, it came after three successive raises in interest rates since last December.
Central banks around the world are following suit. Bank Negara Malaysia reduced its overnight policy rate in May. More recently, shortly after the Fed announced its rate cut, the Reserve Bank of New Zealand shocked many by slashing its official cash rate by 50bps to 1%.