John's Florida Real Estate Blog


Recession Fears Cause Federal Reserve To Drop Key Interest Rate

Today, September 18, 2007 the Federal Reserve cut the interest rate that banks charge each other by a half a point, the first drop of this rate in 4 years. This was done to prop up the slumping housing market and head off any possibility of a recession. The actual drop was from 5.25% to 4.75%. The drop should lower the cost of borrowing money for both consumers and businesses. Experts feel that since inflation has not been a problem recently, the Fed has room for some rate cuts. However, if inflation begins to heat up we could see the Fed do an about-face on its current direction. Time will tell.

It will be interesting to see how these cuts affect the Freddie Mac average mortgage interest rates in the coming weeks. On Thursday I will publish the first data from Freddie Mac, but these might not reflect much change based on the Fed's move since the cut came just 2 days before the release of the Freddie Mac average. The impact of the cuts will more likely show up next week in the Sept 27th report.

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John Elwell - REALTOR


Bill Nye Realty, Inc.


Licensed in Florida


Comment balloon 0 commentsJohn Elwell • September 18 2007 04:43PM


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