Fed Cuts Emergency Lending Rate by 1/4 Point

Posted by john in March 17th, 2008

Key Interest Rate Cut

In a VERY rare move the Fed met on Sunday night and decided to cut a key discount rate by 1/4 point to 3.35 percent.

So what does this mean to you. Not much, at least directly. This is the rate the Fed charges banks to borrow money and probably won’t affect consumer interest rates.

It is highly speculated that this rate cut is a move meant to preempt the latest “bad news” including Bear Stearns being acquired by JPMorgan Chase for a paltry $2.00 per share. A far cry from the $159.00 per share price of just 12 months ago. Just the latest victim of the credit meltdown. It will be interesting to see how the stock market takes this latest news.

The Fed will meet again on Tuesday and it is widely anticipated that it will cut short term rates by as much as .5 percent. That will have a much greater impact on consumers than yesterdays rate cut.