Fed Lowered Interest Rate in an Attempt to Halt Stock Market Free-fall

Fed interest rateOne day after the Federal Reserve Chairman signaled that it’s ready to cut interest rate, the central bank, in a coordinated action with central banks around the world, lowered its benchmark rate by 50 basis points to 1.5%. The emergency rate reduction by the Fed came after the Dow Jones Industrial Average Index lost more than 1,400 points (or 13%) in five straight trading sessions. Elsewhere, the People’s Bank of China announced that it cut one-year bank loan rate from 7.20% to 6.93% and European Central Bank lowered its rate to 3.75%.

So far the government and the Fed have responded to the financial crisis aggressively with bailouts and rate cuts. However, it looks like all previous interventions failed to improve investor sentiment as the Dow closed at 5-year low yesterday. The housing market still shows no sign of bottoming out and the credit crisis seems to get worse. Can the latest intervention from the Fed save the stock market?

With all these uncertainties, one thing that will almost certainly happen is banks will lower their interest rates following the Fed’s rate cut. Maybe it’s time to lock in a good CD rate before it’s gone. You can find some good CD deals in my keep my money safe post.

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3 Responses to “Fed Lowered Interest Rate in an Attempt to Halt Stock Market Free-fall”

  1. Lacey |  Oct 10, 2008 at 3:09 pm

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