Credit market injection futile.

Investment Adviser, March, 2008

The Federal Reserve's $200bn (GBP98bn) cash injection into the ailing credit markets will do little to improve the liquidity of financial markets, according to Richard Woolnough, manager of M&G's GBP133m Optimal Income fund. . James Kenny

The Fed recently announced plans to inject the cash into its beleagured credit markets by providing financial institutions with Treasury securities that are equivalent to cash, in exchange for collateral that includes mortgage-backed securities.

The action, which follows a series of cuts in short-term interest rates, was aimed directly at lenders to encourage them to begin lending again.

However, Mr Woolnough said while the action would be helpful for certain problematic areas, it would not address falling...

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