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News - Federal Reserve

  • Fed Cuts Key Rate Quarter Point (The Washington Post 12th Dec 2007)
    The Federal Reserve cut a short-term interest rate yesterday to try to keep problems in the housing and mortgage markets from dragging the nation into recession, but Wall Street judged the move as too timid and financial markets tanked.
    The Fed's policymaking committee cut the federal funds rate, at which banks make overnight loans to each other, by a quarter percentage point, to 4.25 percent. The third rate cut this year is likely to trickle through to interest rates on credit cards, business loans and some adjustable-rate mortgages.
    But investors had hoped for a half-point cut, or at least a clearer signal that the central bank will cut rates again in the future, and stocks plummeted. The Dow Jones industrial average closed down 294 points for the day, a 2.1 percent drop. ..more
  • Credit Crisis Prompts Fed to Roll Back Rates Again (The New York Times 12th Dec 2007) The Federal Reserve cut its benchmark short-term interest rate Tuesday by a quarter of a percentage point, to 4.25 percent, and suggested that it would lower rates again if the credit crisis continued to damage not just housing, but the rest of the economy as well. The stock market dropped sharply after the Fed’s midafternoon announcement, prompting Fed officials, in an unusual move, to put out word that they might take other steps before the end of year to inject money into the banking system.

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