Fed cuts interest rate 3/4 of a point

[Sapiens]

http://news.yahoo.com/s/ap/20080122/...interest_rates

By MARTIN CRUTSINGER, AP Economics Writer
7 minutes ago



WASHINGTON - The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.



The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.

The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world's largest economy, could be headed into a recession.

In a brief statement, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."

[*T*]

Re: Fed cuts interest rate 3/4 of a point



(courtesy Macro Man)

[touchring]

Re: Fed cuts interest rate 3/4 of a point

Looks like $1000 gold will come faster than we thought it would.

[DemonD]

Re: Fed cuts interest rate 3/4 of a point

I think I now know what it feels like to be part of a European army that decided to invade and conquer russia and just had the order to enter that country...

[Mega]

Re: Fed cuts interest rate 3/4 of a point

Gold is all over the place today, i thought if its deflationaly then Oil/Gold etc would crash. My guess is that this will happen till we have a "Major event"...........WAR in the Middle East..............Or more likely a MAJOR oil field runs DRY!

Mike

[Andreuccio]

Re: Fed cuts interest rate 3/4 of a point

Gold is all over the place today, i thought if its deflationaly then Oil/Gold etc would crash. My guess is that this will happen till we have a "Major event"...........WAR in the Middle East..............Or more likely a MAJOR oil field runs DRY!

Mike

Don't we already have war in the Middle East?

[Gordo]

Fed cut once-in-a-generation event

It's a once-in-a-generation event," Mark Zandi, chief economist at Moody's Economy.com, said. In recent years, the Fed has rarely acted between scheduled meetings of the committee, and almost always in increments of one-quarter or one-half point. It was the biggest single cut since October 1984.

Fed's deep rate cut seen as 'once-in-a- generation'

[c1ue]

Re: Fed cuts interest rate 3/4 of a point

It was the biggest single cut since October 1984.

And the market was ho hum...

The best is still to come!

[c1ue]

Re: Fed cuts interest rate 3/4 of a point

Mike Shedlock brought up an interesting point:

The Societe General rogue trader was playing with futures, and SG was unwinding the positions early this week.

Thus the futures fall may not have been so much of a global stock crash, as the reaction to the massive unwinding.

SG's $7.1 Billion dollar unwinding led to panicked futures selling on Monday and Tuesday.

Thus the Fed's panicky 75 bps cut may have been jumping the gun...

[Jim Nickerson]

Re: Fed cuts interest rate 3/4 of a point

Mike Shedlock brought up an interesting point:

The Societe General rogue trader was playing with futures, and SG was unwinding the positions early this week.

Thus the futures fall may not have been so much of a global stock crash, as the reaction to the massive unwinding.



Thus the Fed's panicky 75 bps cut may have been jumping the gun...

Stll if you look at the rest of the world, many markets, most of them, had loses at end of MLK day that exceeded those of US, and none besides Canada lowered their rates. I still consider that the Fed knows much more that the average of us knows.