CNBC: Fed Cuts Rates by 3/4 Point In Bid to Calm Markets
Looks like the Federal Reserve is trying it’s best to suppress the impending recession.
The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.
Dennis Cook / AP
Federal Reserve Bank Chairman Ben Bernanke
The central bank also cut the more symbolic discount rate by three-quarters of a point, to 4 percent.
The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.
Many pundits believe that the bull market that has run since 2002 is also coming to an end. With the recent downturn domestically and the hit that foreign markets have taken over the last few sessions, it seems that they may be correct. It will be interesting to see how low the rate cuts will go and what type of stimulus plan the government will be approve.
I think that periods like this prove that having a long term outlook with stocks is the best approach. These bumps in the road come and go, but over the years, a broad mix of stocks or even better, mutual funds, will see a nice increase. As it is, these bumps provide a nice buying opportunity for those using automatic investment plans.
Filed under: Finance and Investing
