Fed Issues Major Rate Cut

Written by nickel - 4 Comments

Amidst talks of a $145 billion economic stimulus package that is designed to give the economy a “shot in the arm,” the Federal Reserve just cut short term interest rates by 0.75 percent. This drops the rate from 4.25% to 3.5%, meaning that the Fed has reduced rate by 1.75% since September. According to Bankrate.com, additional cuts are expected at next week’s regularly scheduled meeting.

Given that this move was made in response to recent turmoil in the stock market, it’s interesting to note that (as of this writing) the Dow is currently down 2.6%, the NASDAQ is down 3.1%, and the S&P 500 is down 2.75%.

Keep in mind that, regardless of what happens in the stock market, this move means that bank interest rates will be falling in the near future.

Published on January 22nd, 2008 - 4 Comments
Filed under: Economy
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Comments (scroll down to add your own):

Recent actions by our federal reserve suggestive of reassurance for our international friends, and to stoke domestic lending/borrowing. Same rules apply as always to us little people during these days of malaise - reduce debt load, dollar cost average into our diversified allocations, and stop adding new debt! Suggested reading in the interim: “The Crowd” by Gustave Le Bon (appropriate read for these “what’s the crowd doing?” days).
Comment by Ria Rhodes — Jan 22nd 2008 @ 5:46 pm
I for one am glad to see these cuts if it will help the stock market. I still don’t think we’re out of the subprime mess. But these rate cuts will reassure the markets (domestic and international) as well as lower rates so some of these subprime folks will be able to refinance to a fixed rate that they can afford. But for us savers this is not good. Our money in the bank will be earning practically nothing - might not be a bad time to lock in some CD rates.
Comment by KC — Jan 22nd 2008 @ 9:23 pm
Banks interests are falling now. My banker called me to postpone meeting because of the Fed’s cut.

I don’t wish to be a banker right now. Yet who knows… they will figure another way of “skinning” you. wait for for more fees on your investment accounts.
Comment by Nick — Jan 24th 2008 @ 7:11 am
Will the stimulus check be garnished to offset student loans?
Comment by Jacquie — Feb 22nd 2008 @ 2:18 pm