Fed slashes rates to 3.5%

Citing weakening economic outlook, Federal Reserve makes biggest cut in nearly 24 years - three quarters of a point.

January 22 2008: 9:11 AM EST

NEW YORK (CNNMoney.com) — The Federal Reserve slashed two key interest rates by three-quarters of a percentage point Tuesday following an unscheduled meeting, citing continued concerns about a weakening economy and turmoil in the financial markets.

The Fed lowered its federal funds rate, which impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans, from 4.25 percent to 3.5 percent. The Fed also lowered its discount rate, which is what it costs banks to borrow directly from the central bank, by three-quarters of a point, to 4 percent.

This was the biggest rate cut by the Fed since October 1984.

“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 Fed said in a statement.

This entry was posted on Tuesday, January 22nd, 2008 at 11:21 am and is filed under GA Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.