Fed cuts key rates to historic low levels
December 16, 2008 by admin
The FOMC cut rates to historically low levels today in a move aimed at spurring economic growth and lending. The Fed today cuts the fed discount rate down to .25%, a 75 basis point cut from its previous level. This historic move will benefit consumer with loans that are directly tied into the prime rate. The dramatic cut with rates is the last big move that the FOMC can offer related to cutting the monetary policy to try and spur lending. The fed remains committed to ramping up other programs to try and spur growth. The moved earlier this month to purchase over 700 billion of mortgage backed loan securities, a move that directly resulted in a dramatic drop with mortgage interest rates. The economy has been taking significant steps backwords over the past 90 days as job losses and home foreclosures are surging. A recent report indicated that one in every ten homes in the U.S. is behind on their mortgage payment as consumers struggle to maintain their payments as the economy worsens. The Fed will have to work in collaboration with the government and treasury to help spur a rebound in economic growth in 2009.