The Federal Reserve, along with central banks all over the world, have announce an emergency rate cut.  In the United States, the rate was cut from 2% to 1.5%.  This is a good move, I'm just surprised it didn't come sooner, as I mentioned in a previous post.  Since oil prices have fallen from nearly $150 per barrel to $89 per barrel, and the economy has weakened, inflationary pressures should subside.  A reduced rate will help lower payments for Americans and hopefully, make banks more willing to lend.

     The Fed meets again on October 28th and 29th.  I would expect another rate cut of .5%, which will take us down to just 1%.  We could have actually used the full percentage point now, but I think Ben Bernanke wanted to avoid looking to paniced.  By delaying the second cut, the strategy looks more measured and less reactionary.


http://news.yahoo.com/s/ap/20081008/ap_on_bi_ge/fed_interest_rates