rates by three-quarters of a percentage point Tuesday following an
unscheduled meeting, citing continued concerns about a weakening economy
and turmoil in the financial markets.
The Fed lowered its federal funds rate, which impacts how much consumers
pay on credit card debt, home equity lines of credit and auto loans, from
4.25 percent to 3.5 percent. The Fed also lowered its discount rate, which
is what it costs banks to borrow directly from the central bank, by
three-quarters of a point, to 4 percent.
Stock futures, which have been pointing to a gloomy start on Wall Street
after market sell-offs abroad Monday, moved off their lows following the
rate cut but were still sharply lower.
Wall Street had been betting that the central bank would need to initiate
an emergency rate cut before its next scheduled meeting, which concludes on
Jan. 30, in an attempt to help keep the economy from tipping into a
recession.
Since September, the Fed has cut the fed funds rate from 5.25 percent to
4.25 percent. Investors have been clamoring for more, and bigger, rate cuts
in the hopes that it will kick start a moribund economy and encourage
businesses and consumers to spend.
Still, others think the Fed needs to proceed cautiously, especially since
it's fair to argue that aggressive rate cuts during 2001 may be the reason
why banks are in the subprime mortgage mess they are in now.
Article by CNN Money Posted on January 22 2008
Ed Bates
Wasatch First Financial
801.330.4964
www.mloans.net
Apply online for your home mortgage today!
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