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Fed Lowers Rates...

By
Mortgage and Lending with Integrity Home Finance

Those hoping for lower overnight rates got them. "The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3.5%. The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets. The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. Appreciable downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks."

The markets in the United States were closed yesterday, but stock markets around the world declined 5-10% due to fears of a recession, both here and abroad, and the impact of the housing slump on consumer spending. The Fed move is the first inter-meeting move since September 2001, and comes one week ahead of their meeting next Tuesday & Wednesday. In addition to the Fed announcement, U.S. Treasury Secretary Paulson spoke this morning on the economy, housing and credit markets in a scheduled speech. On Friday, the White House unveiled their economic stimulus plan to boost the economy and avert recession, but many have viewed it as too limited to prevent economic contraction: "putting out embers as the forest fire rages" one analyst suggested.

Where do interest rates stand at the moment? The yield on the 2-yr Treasury is down to 2.05%, the 10-yr is 3.53%, and 30-yr conforming conventional loans have improved by .250-.375 in price.

Comments (4)

Jeff Pickering
Pickering Group - Anthem, AZ

 


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Jan 22, 2008 04:22 AM
Cory Clure
Tamarack Realty - Spokane Valley, WA
Great news for everyone thanks for posting!
Jan 22, 2008 04:26 AM
Jorge Merlos
Integrity Home Finance - Rancho Cucamonga, CA

You're welcome!  It is great news, unfortunately for the economy maybe a little too late...

Jan 22, 2008 04:29 AM
Jorge Merlos
Integrity Home Finance - Rancho Cucamonga, CA

Thanks Jeff!  It looks like your the expert in your area as well!

Jan 22, 2008 04:55 AM