You’ve probably already heard this, but in case not…
As was generally expected, the Fed cut the Fed Funds rate another 50 basis points (0.5%) today to 3.0%.
This was the second rate cut in eight days, coming after the “emergency cut” last Tuesday.
This does not necessarily mean mortgage rates will drop.
As expected, lots of coverage from the mainstream media is out there…
With its second rate cut in eight days the Federal Reserve continued one of its most aggressive monetary easing campaigns in recent history as it seeks to nip an incipient recession in the bud.
The Fed lowered its short-term interest rate target 0.5 percentage points to 3%, and left the door open to more: the statement accompanying the move said “downside risks to growth remain” and the Fed would “act in a timely manner as needed to address those risks.” Investors expect the Fed to cut the rate to 2.75% in March.
From the FOMC (the “fed” – Federal Open Market Committee):
Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
Technorati Tags: Fed Funds Rate, mortgage rates, financial policy
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{ 5 comments… read them below or add one }
It seems these rate cuts affect car loans more than mortgage loans. Although some of the local banks base there business loans off of the prime rate, so this could still be a good thing for the economy.
Jay,
I was out of the office all day so this is the first I’ve heard of this. Thanks for the update and the snippets from other media.
I hope they know what they’re doing!
I’m trying to remember the last time we had two rate cuts that large and in such a short period of time.
This is great news for the real estate industry. I hope it helps with the nationwide market. Its creating activity in my market. I have had more phone calls in the last week than I have had november and december combined.
I am just hoping this starts affecting mortgage rates. I am dreaming of a 4% 30 year mortgage. I dont know how possible that is though.
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