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Expect A Fed Funds Rate Cut This Afternoon

The Federal Open Market Committee meets today and will issue a press release in addition to cutting the Fed Funds Rate at 2:15 P.M. ET.

The verbiage of the press release will be as widely watched as the rate cut itself because markets are curious about how far the Federal Reserve will go to lessen the impact of an economic recession.

With every Fed Funds Rate cut, recession becomes less likely, but the other side of the equation is that the probability of long-term inflation grows.

Like recession, inflation can be bad for the economy, too.

The Fed Funds Rate now stands at 3.000% this morning and the FOMC is expected to lower it by 0.750% or more this afternoon.

Mortgage rates are rising today because cuts to the Fed Funds Rate weaken the U.S. dollar which, in turn, makes mortgage re-payments less valuable to investors.

Posted by Jesse Geiken on 03/18/2008 10:50 AM

Comments (2)

fed funds rate cut, rates, mortgage rates

2 Comments on Expect A Fed Funds Rate Cut This Afternoon

MAR

2008

My thinking is that they will only drop it 50 basis points. A 750 point drop would signal a dumping of dollars in the overseas markets.

I am with you, I would be suprised to see more then 50. Some people were expecting 100 but I think that would be too extreme and more of a panic then anything.

Overland Park Real Estate

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