Fed Rate Cut October 2008

Fed Rate Cut October 2008

Well, there's a new rate in town, and it's a 1/2 a percent lower than before. That's right the federal reserve today announced that they will cut the prime lending rate to banks to only 1.0%. That's a full 1/2 percent lower than it was yesterday. The last time the interest rate was any lower, my father was in diapers. The prime lending rate is so low now that there isn't much room left to go lower. Soon they'll just have to start giving the money away(Oh wait, isn't that the bail out?)

What Did the Stock Market Do?

Well the stock market did much of what it wanted to do yesterday, by climbing almost 890 points the day before, making it the second highest trading day ever. Today, the market knew what was going to happen, so there wasn't any big changes. The market closed with a gain of about 290 points.

Will the Rate Help?

Good question. Banks are still holding on to their money with a iron fisted grip. Even though the federal government has all but ordered them to start loaning more money, they are still reluctant to let it go. Time will tell if this rate cut will change much, but if I was you, I wouldn't hold my breath.