On the brink?

The seriousness of the challenges facing the US economy, and by default, the world economy is highlighted by the reaction of the US Fed which made the biggest interest rate cut in 23 years – a whole 75 basis points.

Even more unusual the drop came outside the normal schedule of interest rate reviews.

It will be interesting to see what the Reserve Bank does tomorrow.  The US situation makes an increase in rates highly unlikely but the persisting high inflation means a decrease is also unlikely, so not much choice probably than no change.