Yesterday the Federal Open Market Committee unanimously voted to reduce the benchmark rate to 1%. The prime interest rate (rate consumers borrower at) will likely follow. The .5% dropped brings the fed funds rate to a half a century low.
The Feds have made the move to correspond with recent actions to help our hurting economy. The committee stated, "there are still downside risks to growth", knowing that we are still going to experience a slowing period.
It is important to remember that the prime interest rate is reflected in consumer debt and some installment loans. The benchmark rate is the rate at which the banks borrower funds from the fed overnight. Mortgage rates have seen a slight increase since the announcement today and may settle in the coming days.
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