The Fed cuts interest rate in emergency meeting by 50 basis points to 1.50%

October 8, 2008 by · Leave a Comment
Filed under: Global News 

No surprise, there was a 75% chance of a half percent rate cut at the next FOMC meeting at the end of the month.  The fact that they did this well before their meeting shows the dire situation and leaves the door open for another rate cute at the next meeting if the credit and stock market conditions worsen.  Along with this cut, other central banks are following suit to try and stabilize the global market.

I feel there is enough uncertainty in the credit market and risk with other banks that we are still going to see a sever contraction and much higher inflation in a time when consumer purchasing power and credit are being greatly reduced.  Just because there is “cheap” money available does not mean people want to borrow.


Central banks around the world cut interest rates in unison on Wednesday, responding to a worldwide clamor for concerted action to contain the worst financial crisis since the Great Depression.

The surprise announcement set off volatile trade in global stock markets, which have seen trillions of dollars in wealth wiped out over the past year. But it failed to win a ringing endorsement from any one market.

The Dow turned positive mid-afternoon in a see-saw session, after European stocks nose-dived 6 percent. Emerging markets got clobbered with currencies falling and stocks trading at two-year lows.

It was the latest jolt in a worldwide crisis that has unsettled investment bankers and small investors alike, transformed Wall Street and reshaped the U.S. presidential election.

Europe’s financial sector was also in turmoil with Britain saying it was prepared to inject 50 billion pounds ($87 billion) of taxpayer money into its banks.

Iceland took over two of its largest banks, abandoned support for its withering currency and sought an emergency loan from Russia.

“Confidence has been lost and it’s difficult to regain,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier in Toronto.

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