FED FUNDS, TAKE 1
The Federal Reserve’s easing stance is having a bullish effect on metals. Gold, silver and copper have run up in anticipation of the cut and have continued to increase their gains after. History has shown that when the Fed enacts a monetary policy of tightening or loosening the federal funds rate, they continue on the same course. What is the federal funds rate? The federal funds rate is the interest rate that banks charge each other to borrow overnight in order to comply with reserve requirements of the federal reserve. Prior to the recent cut, we had 11 increases in a row. This was proceeded by 5 cuts in a row resulting in 0 – .25%. When the Fed charts a course, it tends to be slow and steady. The rate cut on September 18th is probably the first of many.
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