How Low Can You Go?by Tim Manni
As expected, the Federal Reserve cut its key short-term rate yesterday; the Federal Funds rate is now a scant one-quarter of one percent. The Prime Rate is down to 3.25% — its lowest point since 1955.
What does it all mean? Our own Keith Gumbinger analyzes the move:
More important that any change in rate policy was the discussion in the release which provided comfort to the market that even with the Federal Funds Rate target near zero, the Federal Reserve still has plenty of ammunition available to influence the economy. Discussions of “quantitative easing” — geek speak for flooding certain markets with cash — is the Fed’s next likely course of action, and may take a variety of forms. … The Fed’s re-emphasis today is more important to the market than the change to short-term rates.
Mortgage rates don’t follow the Prime or Fed Funds rate, of course, but other financial pressures have been pulling them down lately. If you’re planning to buy or refi, we would advise you to move soon.
Read “Cost of Money? Priceless (almost)” here.