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This 2 page Class Notes was uploaded by Corine Gibson on Wednesday September 23, 2015. The Class Notes belongs to FIN 5387 at Texas State University taught by Staff in Fall. Since its upload, it has received 24 views. For similar materials see /class/212745/fin-5387-texas-state-university in Finance at Texas State University.
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Date Created: 09/23/15
FINANCE XXXX Article Review 2 March 22 2003 By Russell XXXXXXXX Source Fed leaves interest rates unchanged Bloomberg News March 18 2003 Problem Whether the Federal Reserve s decision on March 18 to hold the US interest rate at 125 was correct Solution The Federal Reserve took no action due to the threat of war with Iraq which would impact oil prices and other geopolitical uncertainties associated with it The article suggests that there could still be a cut on or before the next Federal Reserve meeting on May 6 Analysis Fed of cials hold the view that the weakness in the economy is due more to war jitters than a lasting deterioration in consumer or business spending and investment plans Yet the article points out the following 0 Consumer con dence in midMarch slid to the lowest since 1992 o Factoryuse rates are close to an 18year low 0 The economy lost 308000 jobs in February 0 Retail sales fell 16 in February the biggest drop since November 2001 0 Growth is globally on the decline with other central banks also cutting rates Looking at the consumer confidence indices over the period February 20022003 see Table 1 obtained from pMwwwdedstatmousresearchancmlanninqindicators it is clear that the index has decreased signi cantly over the past nine months and does not seem to be leveling off It may rebound slightly as it did in November 2002 but this is most unlikely considering the war in Iraq has now begun Unless the war in Iraq nishes in the next few weeks we can expect the consumer confidence index to drop further As 1of4