Fed Cuts Rates Again, 1/2%, Rates Go Up
30 January 2008
In the first FOMC meeting of the year, the Fed cut rates by .5% as generally expected. This followed the emergency rate cut of .75% last week, and indicates that the Fed really believes that the economy is in bad shape. The stock market has reacted favorably this afternoon, and as a result bonds are down and mortgage interest rates could increase slightly this afternoon.
The Fed issued a statement detailing their continued concerns about the economy and left open the possibility for more rate cuts if necessary.
Also reported today, was some worse than expected economic news. the 4Q preliminar reading of the GDP was released and posted a level much lower than expected. This is further evidence of a weakening economy.
Tomorrow we’ll see the 4th Quarter Employment Cost Index, a key measure of wage inflation.
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