Tuesday, January 22, 2008

Hoping to Prevent Recession - Fed Cuts Interest Rate Again

In a surprise inter-meeting decision, the Federal Reserve lowered its target for the federal funds rate in response to a weakening economy. In an emergency move, the Fed lowered its rate by 75 basis points to 3.50%. The rate-setting arm of the Federal Reserve, the Federal Open Market Committee, lowered the rate in an effort to prevent a recession due to ongoing problems and softening in the housing, credit, labor, and financial markets. The Open Market Committee's regular meeting is scheduled for January 29-30, at which time additional cuts may occur. The federal funds rate is an overnight bank lending interest rate that affects consumer interest rates on credit cards, home equity, and car loans. Read the press release from the Federal Reserve.

Check out "Fed slashes key rate to 3.5%" from CNNMoney.com, "Fed Cuts Key Interest Rate as Asian Markets Drop for Second Day" from the Washington Post, "Market down on recession woes but Fed cut helps" from Reuters, "Fed Slices Interest Rate by 0.75%" from FOX Business, and "Fed slashes rates in shock move" from BBC News.

Need more information on the Federal Reserve? Try FED101, an interactive website on the Federal Reserve's history, monetary policy (including interest rates), regulatory functions, and financial services.

Want more information on banking, banks and credit unions? Check out the library's guide.

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