Early-Morning Rate Cuts Galoreby Tim Manni
The Federal Reserve cut its target for the Federal Funds rate to 1.50% this morning. The between-meeting move wasn’t entirely unexpected, but it came as part of a coordinated campaign to ease monetary policy:
The world’s major central banks moved in concert Wednesday to slash key interest rates, easing monetary policy around the globe in an ongoing struggle to head off financial turmoil that has threatened to flatten the international economy.
The coordinated rate moves saw the Fed cut its key lending rate by half a percentage point, to 1.5%.
The European Central Bank trimmed its key refi rate to 3.75% from 4.25%, while the Bank of England cut its key rate to 4.5% from 5%. The Bank of Japan sat out the move but issued a statement backing the action. The Bank of Canada, the Swiss National Bank and the Swedish Riksbank cut rates as well.
The Fed also cut the discount rate by a half percent to 1.75%.
Such coordinated rate cuts are few and far between; this was the first such move since the aftermath of the 9/11 attacks.
UPDATE: Since several people have emailed (you can comment, you know!) to ask about the Prime Rate. A growing number of banks have already adopted a 4.50% Prime, but the new rate won’t be official until it’s published in The Wall Street Journal tomorrow.