Reply to thread

Message: <blockquote data-quote="Sara Moon" data-source="post: 11758" data-attributes="member: 525">4. The Federal Reserve and Interest Rates ([USER=1160]@Alice G[/USER])The story:Donald Trump has continued his assault upon the Federal Reserve (The Fed) this week by criticising its decisions to increase interest rates several times since 2015, despite the US economy being set to achieve its longest expansion in history on 1 July 2019.Rates were raised four times in 2018 and Trump has stated that he believes the stock markets would have been much stronger and that the US economy would be more buoyant had the Fed not done so and, instead, lowered interest rates.His remarks do come at a time when the US economy is doing very well indeed with first quarter growth in 2019 at 3.1% and with the unemployment rate at its lowest in fifty years.The Fed opted to increase interest rates in order to slow the economy and ensure its stability. It aimed to curtail an economic boom with resulting high inflation, while trying to also fend off a job-costing bust. However, it is now widely speculated that the Fed will look to modestly cut interest rates in order to facilitate further economic growth.Impact on businesses and law firms:By lowering interest rates, the Fed will expand the money supply in the US increasing the amount of money circulating in the economy. People are then able to borrow more cheaply and spend more money. Lower interest rates also mean depositing money in a bank becomes less attractive and so people become more likely to invest in stock markets, hence why they become stronger.The US dollar will generally also weaken relative to other currencies which means that US exports will be more attractive to the international market, which should hopefully help the US economy and industry amid the tensions with China and the escalating trade war. Though a weaker dollar does mean that foreign investment US stock will be less attractive.Law firms will hopefully see more M&A activity if the Fed were to lower interest rates because businesses are more likely to borrow and spend while debt is cheap.5. European Central Bank's Effort to Stimulate the European Economy ([USER=525]@Sara Moon[/USER])The story:Last Tuesday, Mario Draghi, the current President of the European Central Bank (ECB), stated that the ECB is considering cutting interest rates or buying more eurozone government bonds to stimulate the eurozone economy. Eurozone inflation dropped from 1.7 percent in April to 1.2 percent in May, the weakest rate for the year. This shows a clear struggle to meet the 2% inflation target set by the ECB. The US-China trade war has led Germany, Europe’s largest economy, to suffer fall in economic growth, with its industrial production falling 1.9 percent in April compared to the 0.5 percent expected by analysts.Impact on businesses and law firms:Policies to stimulate the economy could improve business conditions and offset the impacts of fears of no-deal Brexit and ongoing US-China trade war. Lower interest rates will encourage borrowing money, which will stimulate the economy by increasing spending and raise inflation rate. Buying up of government bonds and corporate debt will also provide greater fund and increase business activities. Greater economic activities means there will be greater cases for law firms to advise on, such as expanding business or making new investments.</blockquote>

Verification: Our company is called, "The Corporate ___ Academy". What is the missing word here?

Top Bottom

Search

Search

Reply to thread