Surprise Fed Cut of 0.50%

October 8, 2008 on 7:51 am | In Economy | No Comments

In an orchestrated move with other Central Banks, the FOMC lowered Fed Funds from 2.00% to 1.50%.

This will bring short-term rates down, but the longer-term may not be affected much. As a result, we will have the steepest yield curve we’ve had in some time.

I just don’t get it though. The Fed Funds rate isn’t the problem. The frozen credit market is the problem, and I don’t see how this is going to help that. Matter of fact, shortly after the Fed Cut the LIBOR rate went up a little. Many short-term lending instruments index to LIBOR in some fashion.

We are updating our rates as fast as we can. Hang in there.

cd :O)