HUGE RATE CUT by the Federal Reserve
Fed cuts interest rates by three-quarters of a percent…
The U.S. Federal Reserve slashed interest rates by a hefty three-quarters of a percentage point in an emergency effort to boost consumer confidence in a weakening U.S. economy and amid turmoil among the world’s financial markets. This most recent cut is the largest since October 1984 - and it’s the first cut between regularly scheduled meetings since a half-point cut immediately following the September 2001 terrorist attacks. The cut lowers the federal funds rate from 4.25% to 3.5% and will effect how much consumers pay for credit card debt, home equity lines of credit and auto loans. The Fed also lowered its discount rate, which is what banks pay to borrow from the central bank, by three-quarters of a point, to 4%.
“Broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets,” the Federal Reserve said in a statement concerning the recent actions.
Treasury Secretary Henry Paulson, speaking at the U.S. Chamber of Commerce in Washington Tuesday morning, said that he hoped the rate cut would restore some confidence in the financial markets and U.S. economy. The action of the Fed came more than a week before their regularly scheduled meeting, a two-day session that ends on January 30. Some observers expect more cuts again at that meeting.
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February 4th, 2008 at 7:27 am
[…] Federal Reserve cuts interest rates again… Coming just eight days after the Federal Reserve took unprecedented action by cutting its benchmark short-term interest rate by a hefty 0.75%, the Fed cut it again by half a […]