The Latest Rate Cut
November 7, 2007
On 31 October, the Federal Reserve cut the fed rate by another one-quarter point. The rate now stands at a low 4.5 percent. An earlier cut was posted in September.
Most experts agree that this cut was brought on by the troubles that are currently being seen in the housing market. There is some worry, and some of it justified, that the weak housing market will have a ripple effect on other important markets and industries.
Some experts believe the cut was premature. The gross domestic product (GDP) for the United States for the July thru September quarter actually grew at a respectable 3.9 percent. This was the best performance in over a year, and was accomplished despite the woes brought on by the weak housing market.
This most recent cut in the interest rate is hoped to help the housing market but that remains to be seen. While interest rates for homes are lower now than they have been in months, the ability to get new credit, even for those who should qualify, may be troublesome as lenders tighten up their credit policies. With this being the case, the newer lower rate may not have as much impact as the Fed would have liked to see.