Article Reviews and Summary
Federal Reserve has given another indication that it will be more than willing to use a much lenient monetary policy in order to heal the convalescing US economy. The lenient policy will drive interest rates further down or will keep the interest rates stable at near 0%. The Federal Reserve may also increase the money supply in the economy to boost the economic transactions in the country.
A decrease in interest rates and an increase in the money supply would mean that investors would use that money to set up new business ventures which would lead to improvement in unemployment numbers, in the economy and would be beneficial for the overall economy. (Reuters, 2014)
Moody’s has increased the rating of Berlin Hyp Mortgage covered bonds to Aaa. .Improvement in rating signifies that the bond is less risk than before. It means that the bond issuer, which is Berlin Hyp, in this case, will have to offer lower interest rate to the investors as these bonds are now considered as a much safer investment than before.
It would save much money for the bond issuer in interest charges that have to be offered to the investor. It will also make the bond a much sought after investment for the risk averse investors because it is less risky and hence investors will have greater chance of recovering their money in the future. The bond default risk has gone down.(Reuters, 2014)
References:
Reuters (2014, March 31). Global stocks up on Federal Reserve support bets. Business Standard
[New York].
Reuters (2014, April 4). Moody's upgrades Berlin Hyp's mortgage covered bond ratings to
Aaa. Reuters [New York].
