Fed goes to zero interest rates

The Federal Reserve has announced that it will lower its benchmark short-term interest rate to somewhere between 0 and 0.25%. The lowest ever recorded. With this initiative, the Fed wants to preserve price stability and promote the resumption of sustainable economic growth. Falling consumer spending and increasing unemployment should be put to halt.
Since currency values and interest rates go hand in hand, the Fed’s decision to lower the interest rates also has its downside. Investors get better returns on their cash in countries with higher interest rates, such as the European countries where the benchmark rate is at 2,5%. This may cause a potential drain on the dollar…

http://www.economist.com/finance/displaystory.cfm?story_id=12818300

Jasper Soete