Fed Keeps Rate near Nil, Markets in the Green

Markets rebounded today in anticipation of the Federal Reserve decision on Interest Rates. The benchmark rate was set in a range of 0% to 0.25% so there wasn't any further down it could go. It's not like the Fed will pay people to take money, will they?

Anticipation of the Fed was going toe-to-toe with headlines of President Obama urging swift action on a huge stimulus package for Americans to get a slowly degrading job market and teetering economy back on a track towards growth. Some of the key statements in the Fed decision were made regarding recovery and overall improvement to the liquidity of credit markets, which still after all these months have yet to really take off. As businesses cut more jobs, cut expectations and cut spending into 2009, the Fed expects a gradual recovery to start sometime in the latter part of the year.

The Fed also clarified that the expanding weakness in the overall economy would keep rates at these low levels for some time if little to no improvement was seen. While rates can't go any lower than 0% the Fed is expanding its arsenal of tools to provide a lift to the macroeconomics plaguing the United States. The Fed has raised its limits on how much banks can borrow directly from the Fed and it has been involved in the purchase of commercial paper from numerous corporations in order to apply liquidity in areas that desperately need it.

All these tools seem to be making a difference at least in the marketplace, if not yet economically. The Dow's green days have certainly outnumbered the red of late as buyers are starting to not only appreciate company valuations but also see a plan that will eventually lead to recovery being formulated by the Nation's new Government.

Only one truly giant hurdle remains! Turning this plan into reality, and that is by no means a trivial effort.