Skip to comments.Fed Funds Rate Cut .75 Percentage Point to 2.25 Percent
Posted on 03/18/2008 11:14:20 AM PDT by Aristotelian
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Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.
Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully.
Todays policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.
In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.
How long before it goes negative?
naa the govt will just keep bailing out more companies like bear stearns to keep the economy from sinking. That’s Bush and Ben’s version of ‘capitalism’
Stopping short of giving the market everything it wanted, the Federal Reserve cut a key interest rate by three quarters of one percentage point on Tuesday. The Fed action takes the federal funds rate target down to 2.25%, the lowest since December 2004 But the market had expected more. Based on futures trading in Chicago, investor's bets implied a 100% chance of a cut of one percentage point. The Fed did leave the door open. In its statement, the Fed said downside risks remain and it would act in a timely manner if needed. Dallas Fed president Richard Fisher and Philadelphia Fed president Charles Plosser dissented in favor of less aggressive action.
Is that all? darn! ;-)
Maybe this will hold long enough for next 100K price drop in San Diego. Soon a decent SFH in a nice neighborhood will be around 400K. Lowering interest rates and a continuing dead housing market = good for buyers. Still need to wait for the negative-am blood to be spilled before buying. Two more years?
You think they bailed out Bear Stearns? LOL!
It’s all Bush’s fault.
Looks like the market expected 1 full point.
It’s going back up.
It that why the DJIA has suddenly dropped 75?
On the other hand, if you are unfortunate enough to lose your job and are trying to sell your home, you are really screwed.
I think so.Happened right after the announcement.I think .75 was a good move though.Leaves some leveraging room and won’t cause a panic like a full 1 point would in coming days.
We have a grand slam here...
Access to credit being strangled
lowering rates is how you ease the recessionary crash into a softer landing but the recession itself is how you combat demand side inflation. Oil can keep going up but slower growth means less demand and the futures market crashes.
The access to credit and solvency issues have to be addressed though. A worldwide depression isn’t going to be in anyone’s best interests.
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