FED CUTS RATES 3/4 PERCENT - Will it Ease Financial Markets? Help Home Borrowers?
BOLD MOVE THIS MORNING DROPS FED FUNDS, DISCOUNT RATES TO 3.5%, 4.0% RESPECTIVELY!
In emergency response to a broad selloff in foreign markets yesterday and overnight, the U.S. Federal Reserve Board made the recently-unprecedented move of dropping two key interest rates by 75 basis points, or three-fourths of one percent. The decision was made by the Fed via a conference call Monday night. It comes on the heels of an 8.7% drop in Hong Kong markets, and a 5.7% drop in Japan, coupled with yesterday's large drops in European Equities Markets (U.S Markets were closed yesterday to observe the Martin Luther King Holiday, not observed internationally).
Most experts were predicting a one-half percent drop in key Fed rates, at it's regular meeting next week, in anticipation of growing recessionary fears. Before the NYSE Opening Bell today, Dow Stock Futures dropped as many as 500 points in anticipation of a turbulent ride on Wall Street today.
Will the FED move reduce overall interest rates. Possible, to some extent - but conventional mortgage rates have dropped somewhat in recent weeks, building in the likely 1/2 point reduction later in January. Adjustable-rate borrowers with rates pegged to the international London Interbank Offering Rate (LIBOR) may not see dramatic adjustments to the next interest rate reset on their mortgage loans, unless the LIBOR rate responds in kind. (See our Chicago Real Estate Stats Pack, via BlogChicagoHomes.com, for our recent mortgage interest rate observations.
Read extensive coverage of today's Fed moves and market activity in today's Wall Street Journal.
DEAN MOSS & DEAN'S TEAM CHICAGO
