Jan 23 2008
Federal Reserve Lowered Overnight Lending Rate to 3.50%
This was the largest rate cut by the Fed since the early 1980s. The Federal Open Market Committee stated, ”The committee took this action in view of a weakening economic outlook and increasing downside risks to growth.”
Over time, rate cuts should stimulate economic growth by making it cheaper to borrow money for consumption or investment. Banks typically lower their prime lending rate for their best customers in lockstep with the Fed. Many consumer and business loans, however, are based on interest rates set in competitive markets, which may or may not follow the Fed’s lead.
The Fed has now lowered interest rates by 1.75 percentage points since Sept. 18. Click here to read the full story.
