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Fed Rate Cut
The Fed rate cut surprised everyone. The Fed’s lowered the Fed Fund Rate 50 basis points down to 4.75%, much better than the expected 25 basis points. The Fed Discount Rate also went down 50 basis points down to 5.25%, surpassing expectations that were a 0-25 basis point cut. This sent the message out that the Fed is serious about fixing the credit crunch brought on by the sub-prime mortgage crisis. A problem that has had the Market and a lot of mortgage holders very jittery lately.
Needless to say the Market responded with enthusiasm. The Dow ended up 335.97 points up and the Nasdaq was up 70 points. All Indexes ended the day up an average of 2-3%.
The Fed rate cut gives a promise that some of those mortgage holders of sub- prime loans will be able to refinance their sky rocketing loans instead of losing their homes. The housing market may also get a boost, by making money more affordable and available for buyers.
Saved by the Bell… For now…
discount rate economy fed rate fed rate cut lower interest rates sub prime
on January 28th, 2008 at 12:25 pm
This is a little one-sided, isn’t it? Are you not seeing that as the Fed decides to save Wall Street and a few very irresponsible business from problems they created themselves, that we will have an increase in inflation? The same thing happened in 1929 and under Carter. The Fed is acting just as irresponsibly as Wall Street in bailing them out. I think that its unfair to saddle younger generations with mountains of debt we’ve piled up in the name of “keeping the economy stable.” Someone will have to pay, and Washington is making darn sure that it won’t be them.