I've been interested in Fed rates since I plan to buy a house in late 2008. Here is the news regarding today's rate cut.
http://biz.yahoo.com/ap/071031/fed_interest_rates.html?.v=47
WASHINGTON (AP) -- The Federal Reserve sliced an important interest rate Wednesday -- its second reduction in the last six weeks -- to help the economy survive the strains of a deepening housing slump that is likely to crimp growth in coming months.
Fed Chairman Ben Bernanke and all but one of his colleagues agreed to lower the federal funds rate by one-quarter percentage point to 4.50 percent at the end of a two-day meeting.
"The pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction," the Fed acknowledged in a statement explaining its action.
The funds rate affects many other interest rates charged to millions of individuals and businesses and is the Fed's most potent tool for influencing economic activity.
In response, commercial banks, including Bank of America, Wells Fargo and KeyCorp., announced that they were cutting their prime lending rate -- for certain credit cards, home equity lines of credit and other loans -- by a corresponding amount, to 7.50 percent.
The rationale behind the cuts is that the lower borrowing costs will induce people and businesses to boost spending, energizing economic activity.
Wall Street was cheered by the Fed action. The Dow Jones industrials jumped 137.54 points to close at 13,930.01.
The Fed policymakers supporting Wednesday's rate cut said the action -- along with a rate reduction in September -- was needed to "forestall some of the adverse effects on the broader economy" that might arise from the housing and credit troubles that have wreaked havoc on Wall Street over the past few months.
Fed policymakers indicated the two rate cuts ordered so far may be sufficient to help the economy make its way safely through the trouble spots.
They said the risks to the economy from inflation "roughly balance," or are equal to, the risks of a serious downturn in economic growth. Previously, the risks of a recession were seen as more of a threat to the country's economic health. "The message: They are now done for the time being," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "They have taken out a significant insurance policy and now they believe they are fully covered against a recession risk -- at least for the near term," she said.
http://biz.yahoo.com/ap/071031/fed_interest_rates.html?.v=47
WASHINGTON (AP) -- The Federal Reserve sliced an important interest rate Wednesday -- its second reduction in the last six weeks -- to help the economy survive the strains of a deepening housing slump that is likely to crimp growth in coming months.
Fed Chairman Ben Bernanke and all but one of his colleagues agreed to lower the federal funds rate by one-quarter percentage point to 4.50 percent at the end of a two-day meeting.
"The pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction," the Fed acknowledged in a statement explaining its action.
The funds rate affects many other interest rates charged to millions of individuals and businesses and is the Fed's most potent tool for influencing economic activity.
In response, commercial banks, including Bank of America, Wells Fargo and KeyCorp., announced that they were cutting their prime lending rate -- for certain credit cards, home equity lines of credit and other loans -- by a corresponding amount, to 7.50 percent.
The rationale behind the cuts is that the lower borrowing costs will induce people and businesses to boost spending, energizing economic activity.
Wall Street was cheered by the Fed action. The Dow Jones industrials jumped 137.54 points to close at 13,930.01.
The Fed policymakers supporting Wednesday's rate cut said the action -- along with a rate reduction in September -- was needed to "forestall some of the adverse effects on the broader economy" that might arise from the housing and credit troubles that have wreaked havoc on Wall Street over the past few months.
Fed policymakers indicated the two rate cuts ordered so far may be sufficient to help the economy make its way safely through the trouble spots.
They said the risks to the economy from inflation "roughly balance," or are equal to, the risks of a serious downturn in economic growth. Previously, the risks of a recession were seen as more of a threat to the country's economic health. "The message: They are now done for the time being," said Lynn Reaser, chief economist at Bank of America's Investment Strategies Group. "They have taken out a significant insurance policy and now they believe they are fully covered against a recession risk -- at least for the near term," she said.
