Fed May Cut The Federal Funds Rate
By Scott Sumerford on Wednesday, October 31st, 2007 :: 1:44 pmCategory: Financial News
The Federal Reserve Board meets today and will decide if they will lower the federal funds rate. On September 18, 2007, the Fed cut the federal funds rate by 50 basis points. They cited slow economic growth and credit concerns as primary reasons for why the rate cuts were made in September.
With the housing market in turmoil, oil prices skyrocketing and consumer confidence shaken, a quarter percent rate cut would not be surprising. Generally, decreases in the federal funds rate help stimulate the economy by encouraging businesses and consumers to borrow money at a discounted interest rate.
How would a rate cut affect you? If you are looking to buy a home, then you could save thousands of dollars on your mortgage due to a lower interest rate. For example, the difference between a 6.75 percent and 7 percent interest rate on a 30 year home loan of $100,000 is a savings of more than $6,000.
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