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The fed lowered the fed funds rate, whats the next move?


The economy was in a free fall and the fed lowered the fed funds rate to 3.5%, what's the next move to help fix the economy?

In a historical move the federal reserve yesterday provided the economy with a much needed boost in acting on an intermediary rate cut of .75%. The global markets have been in a free fall since the beginning of the year and the stock market has lost significant shareholder value as concerns over the U.S. heading into a recession continue to grow. The real question is now that the fed has lowered the fed funds rate, where does the economy go and what will be necessary to ensure future growth. Clearly the Fed believed they needed to ease on monetary policy to help restore the credit markets. This move will hopefully restore some demand in the secondary mortgage market for products such as equity and jumbo loans, which will in turn allow more borrowers to qualify for new mortgage programs and work towards correcting the housing market. The government is also indicating they will offer a broad based economic stimulus package that may include tax rebates and incentives for businesses. In order to pull the economy out of a recession it will take a number of key initiatives to work collectively. The recent Fed rate cut will probably not be the last cut of the year and anticipate at least another half to full point in rate cuts over the next few months. Fixed rate mortgages are again nearing historical lows which is welcome news for homeowners who may have adjustable rate mortgages.

1-23-2008 ? LoanNetwork.com





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