Fed Cuts Rate

Posted on January 30, 2008
Filed Under Business |

The central bank lowered interest rates to 3% from 3.5% after a two-day meeting.

Last week, the Fed slashed the cost of borrowing by the largest amount in 25 years in a shock move to calm tumbling global stock markets.

Wondering if all this is going to bolster the flagging economy. I really hope it does. The rate of growth for the US economy, in the last quarter (Q4) of 2007 was just 0.6%. For a gargantuan economy such as US, which is in the range of $14,000 billion in size, 0.6% growth rate also matters a lot and bringing down the rate to 3% may prevent the slide but we can perceive the rate of growth to be sluggish.

With the economic stimulus provided by Bush and his cabinet, may help a bit, but it is the help that mortgage companies can provide to owners of foreclosed homes that can make the difference. With the prices of new home spiraling downward and the new Home sales in its all time low, it will take a long time for things to get back to how it was in 2003-04.

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