LaPorte Group Blog

The Fed today slashed the Fed Funds Rate by .75% before the market opened this morning.   This is the first time the Fed has had a rate cut in between meetings since September 17, 2001 just after the 9-11 attacks.  And this is the first .75% cut since 1984. 

 

This helped to make sure the Dow Jones Industrial Average from dropping like other stock markets around the world did.  On Monday while the US markets were closed France and Germany stock markets fell by 7%, London's exchange fell just about 5%, and the Asian markets were down 5+%.  The cut in rates helped hold our losses to just over 1% or 128 points.

 

You can read the Fed statement here.

 

We shall see what the effect is to the economy over the coming months. 

 

My one concern is that lenders see rate cuts as inflationary and tend to want more interest for their long term loans, like the 30 year fixed rate mortgages.  Initially today the rates came down and are sitting at lows not seen in over 2 years, but I will be watching to see what happens as more level heads prevail in the coming days and weeks.

 

I will be sure to keep you posted.