Thursday January 31, 2008

Fed slashes rates another half a point to blunt economic slowdown

news.yahoo.com :

The Federal Reserve cut US interest rates by a hefty half-percentage point on Wednesday [30 Jan 2008] as part of an ongoing aggressive effort to halt a sharp slowdown in an economy hit by a housing slump and a credit crunch. The Fed's action takes the bellwether federal funds rate to 3%, the lowest since June 2005, and comes just eight days after the central bank slashed rates by three-quarters of a point.

The cumulative 1.25 percentage point reduction in the interbank overnight rate in less than two weeks ranks among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank. The Fed said its rate-cutting campaign, which has brought borrowing costs down from 5.25% in five steps dating to mid-September, should help thwart the risk of recession, but it left the door open to future moves.

- The markets have already priced in a Fed cut of 50 basis points, so they were overall flat or slightly down. Gold shot up to a new record high of $942.20 before settling back to $920+ which appears to be the current consolidation range.

See also :

1. Fed cuts interest rate 3/4 of a point
2. Gold soars above US$920 as power crisis closes South African mines
3. New home sales plunge record 26% in 2007

(2008-01-31 13:23:18 SGT) [Biz] Permalink Comments [1]

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