Hi there, im new to the forum and am relatively new to trading in general.
I was wandering if anyone could explain why there was such a great response in the markets yesterday to the Fed's rate cut considering the banks are already lending to one another at almost 0% anyway.
My guess has been that the rise in market prices was a psycological reaction. Afterall given the fact that 0% lending is and has already been in effect between the banks for a while, the actual changes in the economy due to the amount of cash in circulation is surely going to remain the same, which would mean there should be no fundamental changes to the economy. Is there more to it than this or does that sound about right?
Thanks
I was wandering if anyone could explain why there was such a great response in the markets yesterday to the Fed's rate cut considering the banks are already lending to one another at almost 0% anyway.
My guess has been that the rise in market prices was a psycological reaction. Afterall given the fact that 0% lending is and has already been in effect between the banks for a while, the actual changes in the economy due to the amount of cash in circulation is surely going to remain the same, which would mean there should be no fundamental changes to the economy. Is there more to it than this or does that sound about right?
Thanks