Skip to comments.Fed Cuts Rates to Historic Low [fed funds from 1.0% to 0.25%]
Posted on 12/16/2008 11:35:21 AM PST by Sub-Driver
Fed Cuts Rates to Historic Low
By BRIAN BLACKSTONE and MAYA JACKSON RANDALL
WASHINGTON -- U.S. Federal Reserve officials on Tuesday slashed official interest rates to an historic low range to combat a deepening recession and signaled they will keep rates "exceptionally low" for some time amid rapidly waning price pressures.
Officials also signaled a new phase for policy in which lending programs financed by the Fed's ballooning balance sheet, a process known as quantitative easing, replace the federal funds rate as the Fed's primary policy tool.
The Federal Open Market Committee voted unanimously to reduce the target fed funds rate for interbank lending from 1% to a range of zero to 0.25%, the lowest since the Fed started publishing the funds target in 1990. The market-determined effective fed funds rate already has already hit record lows in recent weeks. (Read the Fed's statement.)
Economists had expected a smaller cut of just 0.5 percentage point, and hadn't envisioned the Fed setting a range.
(Excerpt) Read more at online.wsj.com ...
The dollar is going to be worthless.
going to be?...............
They can’t cut rates much further, can they? That particular quiver is now empty.
Quantitative easing...Fedese for “gas up the choppers.”
how will this affect mortgage rates??
When it hits ZERO, can I refinance my mortgage for free?..........
All right all you experts. What’s this going to do for Mortgage rates and the ability of people to refinance?
If it gets much below 6% on the street I’ll refinance..........
0.5% 0.25% 0%. I mean, really, what’s the difference? Pushing on a string is still pushing on a string. It doesn’t matter. Not until the Fed starts paying people to take their money. But the opposite is happening. Right now people are paying the Fed to take their money, with negative yields on short bonds.
Of course, the market bumps up on a non-event. It will give it all back by week’s end. With today’s market volatility, +250 pts is a yawner.
I just locked in 4.85. Down from 5.50
If they could take it down to 4-4.5% on a 30 year fixed, can you imagine how much money would begin to flow into the economy.
I did for 5 3/4..........
Um... Isn’t that the plan? Tank the dollar. Reflate the bubble. Rinse, repeat. Of course they are trying to destroy the dollar’s value. That is the game plan to reflate and stave off deflation. Not that it will work... Nobody knows if it will work.
If that was a 30 year fixed, can you share the name of the lender?
"Notify our constituents and lobbyists that the minimum kickback
to each of us in now two billion dollars."
Hey, it worked for Japan!
Oh, wait a minute...it didn’t.
Still penalizing savers to bail out speculators. Didn’t work in Japan - won’t work here.
Mortgage rates will go up in the short haul, then decrease. We are seeing rates in the 4.75% range now. Eventually this may reduce the rate to as low as 4%.
As far as getting a loan goes.....who knows. The credit market has been tight. Only those with good credit and income have been able to refi - however, I am seeing the mortgage brokers refinancing lower credit scores.
Next step, the fed will start paying people to borrow money.
“reduce the target fed funds rate for interbank lending from 1% to a range of zero to 0.25%”
Free loans for banksters! woohoo
This is insane...
Mortgage rates will rise because this will lower the yield on 10 yr treasuries,again.Dollar goes down,mortgage rates go up.
choppers? Probably more like C-130s
Lots. Right now that money is available, but being hoarded by fearful banks. Dump it into the economy, increase the velocity of money (because now everyone feels wonderful, the "good times" are back, etc.), and you've got a recipe for a vicious inflation.
It won’t affect mortgage rates. The Fed buying their own debt is reducing mortgage rates. Cutting the funds rate and trying to hurt the dollar is considered “inflationary” and causes the spreads to go up so it raises mortgage rates. The bottom line though, is that mortgage rates look to be historically low for a long time, until the bond market collapses and crushing inflation occurs (assuming it works to reflate.)
River's Edge Mortgage Llc
91 Main Street
Monroe, CT 06468-1630
Phone: (203) 445-0077
This is the CT branch, but I believe they're nation wide.
Then you must have had a 7.75 or thereabouts.....
The government never met a price they couldn’t fix.
Add the proposed stimulus packages that Barackula wishes to give to the American people. I see the writing on the wall, well now it’s more akin to a warning siren.
Yes...And, that has never happened in this country before, never! (Money is looking for safety only, not interest).
Russians are spending or trading their rubles for US dollars as fast as possible. Russian currency will fold again, shortly.
It was up about 266, now it is only up 176. Initial euphoria, followed by a bit of a return to reality. Kind of like a high from a dose of some narcotic.
It does not matter how low they drop it...
If you do not have a job, no money....Well maybe a few pennies people can muster up in there coat pocket...
The Government is Clueless about there own people...
I'd be happy if they'd simply pay my debts off - then I'll happily resume spending (to a limited degree, of course).
Knee jerk reaction. Nothing more.
Nope - the cutting ship has sailed. Hope this works for a day or two...
For those complaining about the rate cut, you should have complained when the yield curve was inverted, then all of this would have been unnecessary.
Dump the wallet stock! I’m buying wheelbarrow stock!!
Ouch! That is not going to help things. With the world oil market in collapse, you may just be right about another Russian currency crisis.
Things are spiralling down the drain very fast now. It has only been a matter of months since Lehman went belly up. I can’t believe how fast all this is happening.
Time to fuel the next bubble with too-cheap credit.
I just got offered 5.25%, told him I’ll wait a while.
We say that every time the interest rate is cut,but the dollar seems to rebound when we find out how bad everyone else is.In 3 months,the UK will slash rates and the dollar will return.It's been an ongoing cycle through all of this.
>”U.S. Federal Reserve officials...”
the “federal reserve” isn’t Federal, these aren’t U.S. government officials running it, and there are no “reserves”. The “fed” central bank, is a private organization composed of private international bankers, who are no more connected to the US government then Federal Express is:
Maybe long run - but now TLT (a proxy for the 20-yr bond) is up near its highs for the day (or ever).
I think that the plan to "fix" the economy is to lower LT rates to 4.5% for us mere subjects, so that we can buy new houses or re-fi existing ones for a bargain, so as to juice things up. That'll do the trick...and then the velocity of money will ratchet up without money being withdrawn fast enough from the economy, goosing inflation. Then the dollar tanks and rates go up - then the Treasury cannot pay the interest on the debt and THEN we have a serious problem.
All they're doing is postponing the day of reckoning, and making it worse. Greenspan refused to allow the economy to bite the bullet after the Tech Crash and 9/11, and now we're screwed. The mathematics say that we cannot possibly pay back all of the debt. Better to allow defaults now, get the pain over with and rebuild, than to prolong the agony. Its like someone with gangrene who's been given a painkiller, and who then postpones cutting off his leg because "it isn't so bad." Then it invades the rest of the body and he's pushing up daisies.