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1.31.2008

Making English Out Of Fed-Speak (January 2008 Edition)

The Fed lowered the Fed Funds Rate by 0.500% to 3.000% yesterday. The move was widely anticipated and so Wall Street's reaction was muted.

Because it is tied to the Fed Funds Rate, Prime Rate also fell by 0.500% yesterday. Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in next month's statements.

In the statement above -- as explained by The Wall Street Journal -- the Fed expresses concern about the housing and jobs markets, while noting that inflation is less of a worry. This leaves the possibility of future Fed Funds Rate cuts open.

Source
Parsing the Fed Statement
The Wall Street Journal Online
January 30, 2008
http://online.wsj.com/public/resources/documents/info-fedparse0801b.html