Presently FED(whose meeting is going on now) may be Dilemma!!!
Again whether to go for FED rate reduction or not?
There are 2 ways of looking at it.
One is why they need to reduce the rates? There are many answers for this to avoid the deflation, to boost the market sentiments and etc.
Second is why they should not? Because of possibility LIQUIDITY TRAP, about which I already posted so will not discuss same again.
Today they may reduce the FED rate by 25 or 50 basis points. Since their CPI of November month fell by 1.7%, surpassing the previous record decline of 1% set in October. It was the largest one-month decline dating to February 1947. A record plunge in consumer prices in November puts pressure on the Federal Reserve to act decisively to guard against a possibility of deflation.
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