Interest Rates and What to Expect
September 18, 2007
FEDERAL RESERVE CUTS RATES 50 BASIS POINTS
Today's cut by the Federal Reserve of the Federal Funds rate and Discount Rate will have a ripple effect on consumer interest rates.
Banks have lowered their prime lending rate to 7.75% from 8.25% which will lower interest costs on a wide variety of variable rates loans, home equity loans, mortgages, and credit cards providing a major boost to borrowers. Depositors will feel the effect as banks will reset deposit rates lower on CDs, money markets, interest checking, and savings accounts. Yields on short-term U.S. Treasuries, bond funds, and money funds will also fall as investors anticipate more rate cuts, while longer-term Treasuries will yield more as inflation expectations re-emerge.
