The Federal Reserve Tuesday responded aggressively to a housing downturn that threatens to spread to the broader economy, cutting its main benchmark interest rate by a half-percentage point and broadly lowering borrowing costs.
Rate cuts take months to fully work their way through the economy, but consumers and businesses could quickly feel some impacts from Tuesday’s cut in the federal funds rate to 4.75% from 5.25%. The fed funds rate is what banks charge each other for overnight loans.In continuation of the Fed’s cut, the Wall Street Journal has a wonderful article, What the Rate Cut Means for You. Here’s just a snippet of the topics discussed. I highly recommend this article and this week the Wall Street Journal’s content is open and free to peruse. Rupert Murdoch wants to make this permanent, but no decision as of yet. Check out this wonderful resource.
Here’s how the Fed’s rate cut could affect your wallet:
• Expect lower rates on home-equity lines of credit and some credit cards.
• Brace yourself for lower yields on money-market funds and savings products.
• Borrowers with adjustable-rate mortgages tied to Libor aren’t likely to get immediate relief.
• Fixed-rate mortgage rates could move higher if inflation worries grow.