Fed Cuts Rate by a Quarter Point, to 2%

[constitutional]

Fed Cuts Rate by a Quarter Point, to 2%

WASHINGTON — The Federal Reserve, mixing its concern about the weak economy with worries about the rising cost of energy and food, reduced short-term interest rates Wednesday for the seventh time in seven months, and left open several options.

The Fed’s action, lowering short-term rates to 2 percent from 2.25 percent, followed new indications that the American economy remained fragile, expanding by 0.6 percent on an annualized basis in the first quarter, not an overall downturn that would have indicated a full recession had begun.

The poor record of economic growth, reported by the Commerce Department on Wednesday morning, reflected what most Americans have been experiencing since late last year — declines in consumer spending, housing prices and business investment, along with spreading unemployment.

Wall Street gave up sharp gains after the Federal Reserve announcement because of the uncertainty of the central bank’s next move. The Dow Jones industrial average, which was up about 120 points and moved higher after the announcement, was up less than 30 points about an hour later.

Wednesday’s interest rate action was accompanied by a parallel decision to lower the Fed’s discount rate, the rate the Fed charges banks and thrift institutions, from 2.50 percent to 2.25 percent.
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[DrCap]

I remember the good 'ole days when the market always rallied with a fed rate cut, even if it was anticipated.
Anyone else recall a time when the market fell after the fed cut interest rates (prior to 2008). I find it somewhat ironic that the fed is now so powerless that something that would have been a 2% gain for the Dow now means nothing- yes I suppose it's 'cause the market already anticipated it and the wording implies the fed isn't going to cut more. But doesn't the market think the fed will step in an make more 'emergency' cuts if needed anyway?
Well the most I now see is 4 little 25 basis point bullets or 2 big 50 basis point bullets left in their gun. I don't think bernacke has the balls to go below 1%. He's already being criticized in the msm now.

 

[Fox McCloud]

I agree with you, DrCap; they "say" that the rate cuts are done "for now", but this recession isn't getting any better any time soon, and it's like that the Fed will "help" them by lowering rates even lower....I'd be willing to bet you'll see another one before July.

I disagree though that he'd go below 1%....if the Fed gets the nod to regulate all the economy, he'll probably do it....dunno how low he'll go, but...who knows?

What's the lowest rate the interest rate has been at? 1%?

We could do what Japan did, and set the interest rate at 0%...but I highly doubt that'll happen--it's more likely the economy will implode before the Fed does that....though I could end up eating those words later on.