Fed drops Fed Funds Rate by half percent
Mortgage News from Quicken Loans
The Federal Open Market Committee (FOMC, Fed) today reduced its Fed Funds Rate by a half percent. The Fed Funds Rate is the overnight rate at which banks lend to each other which, with today's action, is now 4.75 percent. This was the first reduction of the rate in more than three years.
The Fed dropped the rate in response to the current credit turmoil and to help stabilize the housing sector.
According to Quicken Loans Chief Economist Bob Walters, the Fed took decisive action to help improve the consumer credit situation.
"The Federal Reserve today took an aggressive stance toward injecting money into the economy with a half-percent reduction in the Fed Funds Rate," said Walters. "It was widely accepted that the Fed would cut the rate, but most expected a quarter percent reduction. With this decision, the Fed is acknowledging that the consumer credit situation needs serious attention. This is very likely going to be the first in a number of rate drops the Fed will enact in an effort to support the economy and, specifically, the housing market."
This article is reprinted by permission from Quicken Loans © 2007 Quicken Loans Inc. All rights reserved.
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