In the face of a huge housing crisis that is threatening to drag down the entire economy, the Federal Reserver dropped the widely followed Fed Funds Rate .75. This puts the Fed Funds Rate at 3.5o%. The fear of a recession is obviously higher than the fear of inflation.
This size adjustment was not anticipated by many. Most people felt they would lower the rate by .25 or .50. This was the first .75 point cut since October 1984. With the stock markets around the world falling and our stock market deteriorating on the fear of a recession the Federal Reserve has decided to make decisive moves.
The timing of the rate cut was not anticipated either. This was an emergency cut ahead of their regularly scheduled meeting.
Will it keep us out of a recession? Only time will tell.
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