Press Release:
"Throughout the current financial crisis, central banks have engaged in continuous close consultation and have cooperated in unprecedented joint actions such as the provision of liquidity to reduce strains in financial markets...
Federal Reserve Actions
The Federal Open Market Committee has decided to lower its target for the federal funds rate 50 basis points to 1-1/2 percent. The Committee took this action in light of evidence pointing to a weakening of economic activity and a reduction in inflationary pressures.
Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation."
Banks thru-out the US (Wachovia, Bank of America, LaSalle, Wells Fargo Bank) have announced immediate decreases in their prime lending rates to 4.50%. Bank prime rates are major factors in determining pricing for corporate and consumer lending. The hope is that this drop will increase the availability of business and consumer credit.
Mortgage interest rates have remained relatively stable as the crisis on Wall Street continues and this change is expected to have a minor influence on the 30 yr fixed rate mortgage market.
