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.