The Federal Reserve, acting in coordination with other global central banking authorities, cut the Federal Funds rate, a key interest rate by (1/2%) half percentage point Wednesday in order to help stabilize the current lending crisis threatening the US economy.
The Bank of England cut its rate by half a point while the European Central Bank reduced their's as well. Other central banks also taking part include the banks of Canada, Sweden, and Switzerland.
China also cut its key interest rates Wednesday for a second time in less than one month to stimulate slowing economic growth amid the global credit crisis.
The fact that the Fed didn't wait until its regularly scheduled meeting on Oct. 28-29, underscored the urgency of the situation. In response, the prime lending rate for millions of borrowers will drop by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans.
Although inflation has been high, the Fed believes that the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.
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www.MortgageAdvisor.info & www.GregZaccagni.com
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