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Low interest rates - Will equities rise?, MALAYSIAN BUSINESS


Malaysian Business
12-01-2001
As interest rates worldwide plunge to new lows, market theory dictates
that equity markets will rise although, interestingly, this has yet to
happen.
CENTRAL banks all over the world are currently cutting interest rates
to avoid the threat of worldwide recession. The US Federal Reserve started
the ball rolling, cutting its target rate for the tenth time this year
to two per cent. The European Central Bank (ECB) cut its benchmark rate
by 100 basis points this year to 3.75 per cent. Other major economies have
also followed suit in order to prevent major capital inflows that may disrupt
currency stability.
Based on market theory, low interest rates normally cause the ...

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