Fed Cuts Fed Funds Rate by .5 Percent
Posted on September 18th, 2007 by Jonathan Dalton
The Federal Reserve today cut the Fed Funds rate by .5 percent to 4.75%, the first rate cut since June 2003. The full press release is available here.
Note that the .5 percent drop doesn’t mean interest rates necessarily will drop by the same amount. Interest rates move due to supply and demand factors and to some degree a cut already was reflected in the rates. However, most were expecting a .25 cut so some downward movement can be expected - it just may take a while.
Is this good for the housing market? Bad? Will it not matter a whit? What say you?
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I was surprized by the 1/2 point cut. With credit tightening the Fed seems to be worried about an over correction in the housing sector. Here is a section of their statement that was most relevant to our industry:
“the tightening of credit conditions has the potential to intensify the housing correction”
It’ll be interesting to see how things develop in the next 3-6 months.