After four years, the Federal Reserve Bank has decided to drop interest rates by 0.5 percent. This decision came up on September 18, and is seen by many as an indication that the economy has turned a corner and is on its way to recovery. While the continued long-term economic depression that is centered on the sub-prime mortgage rates is still blamed for slow spending across the country, the Fed’s drop in interest rates is being taken as a ray of hope for an economic turnaround.
The Korean business industry, along with the rest of the country, has suffered from this depressed market for some years. Now Korean businessmen hope for an economic recovery. Korean real estate brokers, possibly the hardest hit by the continued economic depression, are positive about the effects of the rate decline. But so are the owners of construction companies, loan companies, groceries, restaurants, nail salons, import-export businesses, and accessory companies, who are all hoping for a much-needed economic recovery.
Experts are positive about the Fed’s rate change, viewing it as an encouraging factor towards recovery. While experts still see the economy as shaky and subject to negative effects by even small problems, they are nevertheless confident that a resolute enforcement by the Fed will have a positive influence on an economy. The lowered interest rate appears to have a positive effect already, especially in the area of banking. The New York stock exchange rose continually in the days following the Fed’s interest cut. This is good news for the stock market. This ‘green light’ for the U.S. economy seems to be allowing several key economic indicators to move forward slowly.
According to the Department of Commerce recent figures, August’s consumer price index had dropped by 0.1 percent. This was the first drop in the index this year. The wholesale price index also showed the largest drop (6.6 percent) since 2003. This was helped by the 1.4 percent drop in energy prices last month. The wholesale price index has been dropping since October of last year, indicating that consumer worry about inflation is slowly waning. The Korean business industry in the United States welcomes the Fed’s strategic management of the interest rate. Korean business owners are optimistic because they believe that the Fed’s invigorating policy will stabilize the real estate and bank markets, and that these improved conditions will play out favorably for everyone, including themselves. In this case, favorably means that the economy will return to a situation of increased cash flow, and increased spending among Korean consumers.
Mr. Jae-gon Chong, chairman of the New York Korean Business Council, said, “First of all, we should see that this action by the Federal Reserve Bank is not enough alone to bring about a complete recovery in the economy. That being said, it is true that this action will help reduce the economic risks and lag-time for Korean businesses in the United States. We will see an increasing economic recovery from October to the end of the business year, due to the Fed’s new position.”
Mr. Yong-son Kim, chairman of the New York Korean Business Owners Association, said, “We hope that the problem of credit card debt will be relieved, and that this will allow strengthen the economy. The long-standing decrease in consumer activity among Koreans in the United States should turn around – even disappear – and this will have positive effects on the economy for Korean business.”
