More On Legal & Compliancefrom The Advisor's Professional Library
- Nothing but the Best Execution Along with the many other fiduciary obligations owed by RIAs, firms owe a duty to seek best execution of clients transactions. If they fail to do, RIAs violate Section 206 of the Investment Advisers Act.
- How to Avoid Sabotaging Your Compliance Exam There is much more to compliance examination survival than knowing all of the rules. It helps to understand why the rules were put in placeand to recognize that examiners are not the enemy.
The unprecedented has become almost routine. One day after saying it would set up a facility to buy commercial paper directly from corporate issuers, the Federal Reserve early on October 8 issued a joint statement with five other central banks around the word that it would reduce interest rates. The banks include the European Central Bank, the Bank of England, and the Canadian, Swedish, and Swiss national banks.
Later in the day, the Chinese national bank also cut its benchmark lending and deposit rates by 27 basis points, while the Bank of Japan expressed its support of the actions.
The statement from the Fed noted that "inflationary pressures have started to moderate in a number of countries," and that "inflation expectations are diminishing." The Federal Open Market Committee thus decided--three weeks ahead of its next scheduled meeting--to lower its target for the federal funds rate by 50 basis points, to 1.5%. The other central banks also cut their rates by 50 bps.
The FOMC cited economic data suggesting that "the pace of economic activity has slowed markedly in recent months," and that the "intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit." The committee acknowledged that "inflation has been high," but voiced its belief that a decline in prices for energy and other commodities and "weaker prospects for economic activity have reduced the upside risks to inflation."
The Fed Board of Governors also cut the discount rate by 50 bps to 1.75%.