12 December 2007
Fed Cut refers to the reduced interest rate at which US financial Institutions can borrow money from the US Reserve Bank. It is similar to the concept of REPO and reverse REPO in India.
1. Because of fed cut, money costs less and that such money comes to the stock market. Prices of the stocks rises on account of huge inflow of money.
2.Companies can borrow at lower rates, meaning that they spend less in interest charges. This means that the money goes to profits, boosting share prices.
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