Fed lowers rates, hints cuts may be at end
The Federal Reserve cut the federal funds rate by a quarter of a point to 2 percent on Wednesday, the latest – and possibly last – in a series of reductions aimed at staving off a recession and easing the credit crunch.
MAKING SENSE OF THE STORY FOR CONSUMERS
• In September, when the Fed initiated the first of seven consecutive interest rate reductions, the federal funds rates stood at 3.25 percent. The last time the rate was this low was in December 2004.
• In making the announcement, the Fed noted that, “The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity.”
• There was some speculation that the Fed was leaving the door open to additional rate cuts if inflation concerns become reality. However, others speculate the Board may leave rates alone until the impact of its recent efforts become clearer.
