The Federal Open Market Committee cut its benchmark federal funds rate by a half percentage point to 4.75%. In an effort to ease the credit crunch, the Federal Reserve also reduced its discount rate in lockstep to 5.25%. This is the first cut in the federal funds rate since June 2003. In a statement, the FOMC said the action “was necessary to forestall some of the adverse effects on the broad economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.” The Fed said that some inflation risks remain. It said the credit crunch could hurt the economy.
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Sam Chapman says:
Cutting the discount rate is just a start. I’ve been hearing a lot about making FHA loans abailable for people who will be hit by an interest rate hike because of an ARM adjustment. I wonder how many home owners will go for that.
September 18, 2007 — 1:54 pm