Wednesday, October 31, 2007

Fed Cuts rates - but not enough...

The Federal Reserve cut both the Fed funds and Discount rate by 1/4 of a per cent today. That puts the federal funds rate at 4.5% and the discount rate at 5% for the time being. The major banks followed with a cut in the prime rate to 7.5% (This will help anyone who has a HELOC loan immediately that is hooked to the prime).

I believe that the Federal reserve should have cut interest rates at least1/2 point today and really gave a boost to the economy, so personally I was disappointed knowing that the worst of the sub-prime problems have yet to be devulged. But... we all know that the fed tends to be much more conservative with their "cuts" than they are with their increases.. So, we will all be watching 'consumer' numbers as we approach the holiday season to see if consumers keep spending... any blip in consumer numbers will almost guarantee another cut in December.

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