Fed cuts rates to zero

The Fed cut federal funds target rate to near zero, down ~1%. The rate was 4.25% last December, and 5.25% Dec. 2006

The announced cut affected short term rates, and things tied to the discount rate, like prime-rate and charge card interest. It didn’t effect mortgage interest rates per se but other Fed activities have, namely, purchasing (and announcing the purchase) of treasury notes, bills, and bonds. Mortgage interest rates are at near historic lows.

The Fed’s announcement makes the rate in the United States the lowest in the Western World. Eventually, this will have an inflationary effect and rates will need to rise. Don’t look for this any time soon.

Fed Target Rate

Fed Target Rate

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