Bankruptcy

Fed Cuts Rates Again

By J. Michael McBride

Showing once again that it will pull out all the stops to avoid further economic slowdown, the Federal Reserve has again cut interest rates, this time by 1/2 a point. This size cut and the comments made both allow for further rate cuts in the future.

Quote:
The Fed action pushed the funds rate to 3 percent. It followed a three-fourths of a percentage point cut on Jan. 22, a day after financial markets around the world had plummeted on fears that the U.S. economy was heading into a recession. That decrease had been the biggest one-day move in more than two decades.

The half-point cut Wednesday followed news that the economy had slowed significantly in the final three months of last year with the gross domestic product expanding at a barely discernible pace of 0.6 percent, less than half what had been expected. The report came amid increased concern from several quarters about a possible recession.

In a brief statement explaining their decision, Federal Reserve Chairman Ben Bernanke and his colleagues said that "financial markets remain under considerable stress."

The Fed move was approved on a 9 to 1 vote. Richard Fisher, president of the Fed's Dallas regional bank, dissented, preferring no change in rates.

The rate cut marked the fifth time that the Fed has cut the funds rate since it started with a half-point cut on Sept. 18 in response to the severe credit crisis which hit global markets in August.

Here is a link to an informative article on the latest rate cut: http://biz.yahoo.com/ap/080130/fed_interest_rates.html

Michael

Full post as published by Texas Lawyer Blog on January 30, 2008 (boomark / email).