US Federal Reserve Cuts Interest Rate By 50 Basis Point: The US Federal Reserve cut its key lending rate by half a percentage-point Wednesday in its first reduction since the onset of the Covid-19 pandemic, sharply lowering borrowing costs shortly before November's presidential election.
The Fed's decision will affect the rates at which commercial banks lend to consumers and businesses, bringing down the cost of borrowing on everything from mortgages to credit cards.
When the U.S. Federal Reserve (Fed) cuts interest rates, it lowers the cost of borrowing money. A 50 basis point cut means that the interest rate has been reduced by 0.50% (since 1 basis point = 0.01%).
1. Lower borrowing costs:
For consumers and businesses: Loans, mortgages, credit cards, and other forms of debt become cheaper. This encourages more borrowing and spending by businesses and individuals, which can stimulate economic activity.
2. Stimulating the economy:
The Fed typically cuts rates to boost economic growth, especially during times of economic slowdown or recession. By making it easier and cheaper to borrow money, the hope is that consumers and businesses will invest, spend more, and boost economic activity.
3. Impact on savings:
Interest on savings accounts or fixed deposits decreases, making it less attractive to save money in banks. This can encourage people to spend rather than save.
4. Effect on inflation:
If the economy is weak and inflation is low, the Fed may cut rates to increase inflation to a healthy level (around 2%). Lower rates can spur demand, which may eventually lead to higher prices (inflation).
5. Impact on the stock market:
Lower interest rates generally benefit the stock market because businesses' borrowing costs go down, which can increase profitability. Investors may also shift money from low-yield savings to higher-risk assets like stocks, driving stock prices up.
6. Currency depreciation:
A rate cut can lead to a weaker dollar because lower interest rates reduce the returns on dollar-denominated assets, making them less attractive to foreign investors. This can help U.S. exports by making them cheaper for foreign buyers.
7. Loan and mortgage implications:
For individuals with variable-rate loans or new borrowers, the cost of borrowing could drop. For example, mortgage rates may decline, making it cheaper to buy a house.
In short, a 50 basis point cut is a significant move by the Fed aimed at making borrowing cheaper, stimulating spending and investment, and supporting economic growth.
2.Windfall tax on crude oil cut to zero:The government on Tuesday (September 17, 2024) slashed windfall tax on domestically produced crude oil to 'nil' per tonne with effect from September 18.
On Tuesday, crude oil prices increased by a dollar a barrel due to supply chain issues, and traders estimate that demand will grow if the US Federal Reserve lowers borrowing costs this week
Over 12 per cent of crude production from the US Gulf of Mexico was offline last week due to Hurricane Francine. This has increased oil prices in three of the past four sessions, an increase after Brent hit the lowest in nearly three years last week. US crude oil futures gained $1.31, or 1.9 per cent, to $71.40, whereas Brent crude futures rose by $1, or 1.4 per cent, to $73.75 per barrel
A windfall tax is a one-time levy imposed by a government on companies that unexpectedly earn large profits, often due to a sudden increase in market prices or a favorable change in government policy. In the context of crude oil, a windfall tax would be imposed on oil producers when the price of crude oil rises significantly above historical levels.
Why Implement a Windfall Tax?
Revenue Generation: Governments can use windfall taxes to generate additional revenue, which can be used to fund public services or reduce budget deficits.
Addressing Inequality: Some argue that windfall taxes can help address income inequality by redistributing wealth from large corporations to the general population.
Discouraging Excessive Profit-Taking: By imposing a windfall tax, governments may discourage oil producers from excessively profiting from unexpected price increases.
3.AIKYA: A two-day national symposium of the National Disaster Management Authority and the Army Southern Command entitled Exercise AIKYA begin in Chennai .
The primary aim of the exercise is to enhance disaster preparedness and foster robust collaboration among key stakeholders.
The exercise will feature simulations, technology discussions and expert insights into various roles of disaster management.
4. Bio-RIDE scheme : The Union Cabinet approved the Bio-RIDE scheme, merging two existing schemes under the DBT. With a budget of Rs. 9,197 crore, Bio-RIDE aims to foster innovation, entrepreneurship, and biomanufacturing. It includes a new component, Biomanufacturing and Biofoundry, to advance India's capabilities in biotechnology and create a circular bioeconomy.
Bio-RIDE supports startups, encourages collaboration, and focuses on human resource development to drive India's bioeconomy and achieve its $300 billion goal by 2030.
5.Manoj Kumar Verma appointed as new Kolkata Commissioner of Police
6. RESET programme: introduced “Retired Sportsperson Empowerment Training” (RESET) Programme. This initiative, launched on National Sports Day, aims to encourage retired athletes to remain actively involved in the country’s sports ecosystem.
Retired Sportsperson Empowerment Training (RESET) Programme Programme represents a significant step towards recognizing and utilizing the invaluable experience and expertise of our retired athletes.
The athletes, who have retired from an active sports career and are aged between 20-50 years and who have been winners of an International Medal/participants in international events or have been National medallists/State medallists/participants in competitions recognized by National Sports Federations/Indian Olympic Association/Ministry of Youth Affairs and Sports are eligible to apply .
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