March 18, 2008 at 12:00 pm by Tom Lydon
The Federal Reserve met today to cut interest rates by 0.75% in the hopes that it will ignite a turnaround in our economy, markets and exchange traded funds (ETFs).
Now that most analysts and economists believe we’re in a recession, the pressure is on the Fed to be aggressive in its actions. Today was the latest move in that effort, although most had predicted a rate cute of one full point, reports the Associated Press. The rate targets the federal funds rate, which is the interest banks charge each other. The rate is at its lowest point since late 2004.
Since September 2007, the Fed has cut interest rates by 3% (including today’s cut) and injected about $1 trillion into the financial system, says Aaron Task for the Tech Ticker. But he wonders when they’re going to take a break. How much lower can they go?
Some believe the Fed, with its frantic efforts to revive the economy, is merely prolonging the inevitable. Mark Dow for Pharo Management says that the Fed isn’t trying to avoid a bad outcome and that these efforts are just to keep things moving in an orderly fashion so people don’t make decisions or moves based on pure panic.
Tags | Federal Reserve
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