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Fed Cuts Rates to Historic Low [fed funds from 1.0% to 0.25%]
Wall Street Journal ^

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 ...


TOPICS: Breaking News; Business/Economy; Government
KEYWORDS:
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1 posted on 12/16/2008 11:35:21 AM PST by Sub-Driver
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To: Sub-Driver

The dollar is going to be worthless.


2 posted on 12/16/2008 11:37:16 AM PST by mysterio
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To: mysterio

going to be?...............


3 posted on 12/16/2008 11:37:34 AM PST by Red Badger (Never has a man risen so far, so fast and is expected to do so much, for so many, with so little...)
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To: Sub-Driver

They can’t cut rates much further, can they? That particular quiver is now empty.

Quantitative easing...Fedese for “gas up the choppers.”


4 posted on 12/16/2008 11:37:52 AM PST by Ancesthntr (An ex-citizen of the Frederation dedicated to stopping the Obamination from becoming President)
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To: Sub-Driver

how will this affect mortgage rates??


5 posted on 12/16/2008 11:37:56 AM PST by elpadre (nation)
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To: Sub-Driver

When it hits ZERO, can I refinance my mortgage for free?..........


6 posted on 12/16/2008 11:38:29 AM PST by Red Badger (Never has a man risen so far, so fast and is expected to do so much, for so many, with so little...)
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To: Sub-Driver


7 posted on 12/16/2008 11:38:33 AM PST by vietvet67
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To: Sub-Driver

All right all you experts. What’s this going to do for Mortgage rates and the ability of people to refinance?


8 posted on 12/16/2008 11:39:05 AM PST by Old Retired Army Guy (tHE)
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To: elpadre

If it gets much below 6% on the street I’ll refinance..........


9 posted on 12/16/2008 11:39:16 AM PST by Red Badger (Never has a man risen so far, so fast and is expected to do so much, for so many, with so little...)
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To: Sub-Driver

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.


10 posted on 12/16/2008 11:39:49 AM PST by Freedom_Is_Not_Free
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To: Sub-Driver
Next they'll be paying the banks for borrowing money.

Lamh Foistenach Abu!
11 posted on 12/16/2008 11:40:04 AM PST by ConorMacNessa (HM/2 USN, 3/5 Marines, RVN 1969. St. Michael the Archangel defend us in battle!)
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To: elpadre
how will this affect mortgage rates??

I just locked in 4.85. Down from 5.50

12 posted on 12/16/2008 11:40:19 AM PST by Puppage (You may disagree with what I have to say, but I shall defend to your death my right to say it)
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To: Red Badger

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.


13 posted on 12/16/2008 11:40:35 AM PST by Old Retired Army Guy (tHE)
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To: Red Badger

I did for 5 3/4..........


14 posted on 12/16/2008 11:40:36 AM PST by Sub-Driver (Proud member of the Republican wing of the Republican Party)
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To: Sub-Driver

.....................sigh.


15 posted on 12/16/2008 11:40:57 AM PST by Psycho_Bunny (By Obama's own reckoning, isn't Lyndon LaRouche more qualified? He's run since the 70's)
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To: mysterio

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.


16 posted on 12/16/2008 11:41:33 AM PST by Freedom_Is_Not_Free
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To: Puppage

If that was a 30 year fixed, can you share the name of the lender?


17 posted on 12/16/2008 11:41:52 AM PST by Old Retired Army Guy (tHE)
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To: Sub-Driver

"Notify our constituents and lobbyists that the minimum kickback
to each of us in now two billion dollars."

18 posted on 12/16/2008 11:42:15 AM PST by Diogenesis
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To: Sub-Driver
Lower Interest Rates Are Only The Beginning (UK)
19 posted on 12/16/2008 11:43:18 AM PST by blam
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To: Sub-Driver

Hey, it worked for Japan!

Oh, wait a minute...it didn’t.


20 posted on 12/16/2008 11:43:19 AM PST by rightinthemiddle (Without the Mainstream Media, the Left is Nothing.)
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To: Sub-Driver

21 posted on 12/16/2008 11:43:26 AM PST by BGHater (Obama is a Neocon.)
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To: Sub-Driver

Still penalizing savers to bail out speculators. Didn’t work in Japan - won’t work here.


22 posted on 12/16/2008 11:43:30 AM PST by Mr. Jeeves ("One man's 'magic' is another man's engineering. 'Supernatural' is a null word." -- Robert Heinlein)
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To: Old Retired Army Guy

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.


23 posted on 12/16/2008 11:43:34 AM PST by illiac (If we don't change directions soon, we'll get where we're going)
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To: Ancesthntr

Next step, the fed will start paying people to borrow money.


24 posted on 12/16/2008 11:43:45 AM PST by earlJam
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To: Sub-Driver

“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...


25 posted on 12/16/2008 11:43:56 AM PST by nominal
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To: Old Retired Army Guy

Mortgage rates will rise because this will lower the yield on 10 yr treasuries,again.Dollar goes down,mortgage rates go up.


26 posted on 12/16/2008 11:44:17 AM PST by quack ("Those Who Sacrifice Liberty For Security Deserve Neither.")
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To: Ancesthntr
Fedese for “gas up the choppers.”

choppers? Probably more like C-130s

27 posted on 12/16/2008 11:44:26 AM PST by garbanzo (Government is not the solution to our problems. Government is the problem.)
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To: Old Retired Army Guy
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.

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.

28 posted on 12/16/2008 11:44:46 AM PST by Ancesthntr (An ex-citizen of the Frederation dedicated to stopping the Obamination from becoming President)
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To: elpadre

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.)


29 posted on 12/16/2008 11:45:23 AM PST by Freedom_Is_Not_Free
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To: Old Retired Army Guy
It was indeed.

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.

30 posted on 12/16/2008 11:45:23 AM PST by Puppage (You may disagree with what I have to say, but I shall defend to your death my right to say it)
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To: Sub-Driver

Then you must have had a 7.75 or thereabouts.....


31 posted on 12/16/2008 11:46:31 AM PST by Red Badger (Never has a man risen so far, so fast and is expected to do so much, for so many, with so little...)
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To: Sub-Driver

The government never met a price they couldn’t fix.


32 posted on 12/16/2008 11:46:54 AM PST by Tublecane
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To: Ancesthntr

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.


33 posted on 12/16/2008 11:47:25 AM PST by Xenophon450 ( The stain of freedom, he's washed it out... who’s rocking the cradle? I have no doubt...)
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To: Sub-Driver

34 posted on 12/16/2008 11:47:43 AM PST by Red Badger (Never has a man risen so far, so fast and is expected to do so much, for so many, with so little...)
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To: Freedom_Is_Not_Free
"Right now people are paying the Fed to take their money, with negative yields on short bonds."

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.

35 posted on 12/16/2008 11:47:52 AM PST by blam
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To: Freedom_Is_Not_Free
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.

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.

36 posted on 12/16/2008 11:47:55 AM PST by Ancesthntr (An ex-citizen of the Frederation dedicated to stopping the Obamination from becoming President)
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To: Ancesthntr

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...


37 posted on 12/16/2008 11:48:21 AM PST by TaraP (The RAPTURE: Seperation of Church and State)
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To: earlJam
Next step, the fed will start paying people to borrow money.

I'd be happy if they'd simply pay my debts off - then I'll happily resume spending (to a limited degree, of course).

38 posted on 12/16/2008 11:49:06 AM PST by Ancesthntr (An ex-citizen of the Frederation dedicated to stopping the Obamination from becoming President)
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To: Ancesthntr

Knee jerk reaction. Nothing more.


39 posted on 12/16/2008 11:49:23 AM PST by Freedom_Is_Not_Free
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To: Ancesthntr
They can’t cut rates much further, can they?

Nope - the cutting ship has sailed. Hope this works for a day or two...

40 posted on 12/16/2008 11:50:09 AM PST by GOPJ (There are no "tough" issues - just "tough" consequences.)
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To: Sub-Driver
If the W administration had a spine and a clue they would have stuck to the original plan of cleaning the junk out of the system.

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.

41 posted on 12/16/2008 11:50:22 AM PST by Moonman62 (The issue of whether cheap labor makes America great should have been settled by the Civil War.)
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To: mysterio

Dump the wallet stock! I’m buying wheelbarrow stock!!


42 posted on 12/16/2008 11:50:47 AM PST by griswold3
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To: blam

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.


43 posted on 12/16/2008 11:50:48 AM PST by Freedom_Is_Not_Free
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To: Sub-Driver

Time to fuel the next bubble with too-cheap credit.


44 posted on 12/16/2008 11:52:06 AM PST by Jibaholic ("Those people who are not ruled by God will be ruled by tyrants." --William Penn)
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To: Puppage

I just got offered 5.25%, told him I’ll wait a while.


45 posted on 12/16/2008 11:52:43 AM PST by east1234 (It's the borders stupid! My new enviromentalist inspired tagline: cut, kill, dig and drill)
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To: Freedom_Is_Not_Free
Things are spiralling down the drain very fast now

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.

46 posted on 12/16/2008 11:53:41 AM PST by quack ("Those Who Sacrifice Liberty For Security Deserve Neither.")
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To: vietvet67

LOL!


47 posted on 12/16/2008 11:54:15 AM PST by Obadiah (NOMR! - Not One More RINO!)
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To: Sub-Driver

>”U.S. Federal Reserve officials...”

what BS!
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:

http://www.youtube.com/watch?v=LX2DgN1VYgQ&feature=channel_page


48 posted on 12/16/2008 11:57:30 AM PST by FBD (My carbon footprint is bigger then yours)
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To: Puppage

What terms?


49 posted on 12/16/2008 11:58:58 AM PST by Post Toasties (It's not a smear if it's true.)
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To: quack
Mortgage rates will rise because this will lower the yield on 10 yr treasuries,again.Dollar goes down,mortgage rates go up

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.

50 posted on 12/16/2008 11:59:58 AM PST by Ancesthntr (An ex-citizen of the Frederation dedicated to stopping the Obamination from becoming President)
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