Fed Cuts Half Point to 1%…Stocks Decline, Mortgage Rates Steady
October 29, 2008
The news on today’s Fed cut is this: It was expected and likely won’t significantly help the economy. The policy statement acknowledged that the economy has slowed significantly and that further “downside” risks remain. It also noted that lower energy and commodity prices are promoting “price stability.” This means that inflation is now much less of a concern than it has been over the past 6 months. At 1%, the Fed Funds Rate is at it’s lowest level in many decades, yet the statement keeps the door open for further reductions.
Stock prices were all over today, but the Dow closed down about 80 points. 10 year treasury yield moved up to 3.85% and mortgage rates remained steady. If tomorrow brings a change in mortgage rates, it will probably be for the worse. I do think, however, that rates will soon dip lower again.
Click this link to read the Fed Statement: http://www.federalreserve.gov/newsevents/press/monetary/20081029a.htm
