The Federal Open Market Committee cut the federal funds rate another 50 basis points to 3%. It was predictable and the markets were happy as a result of the move.

The WSJ’s always cool Parsing The Fed explains the meaning behind the words. Hint: Housing.

Yesterday investors were betting a 60% probability that the Fed would drop rates another 50 basis points. And the FOMC did not dissappoint.

The prior week’s rate cut seems to be influencing more refi activity. It’ll help affordability in some markets and temper some of the foreclosure activity, but its no panacea for the housing market.

I am wondering when and how the credit markets are going to get “de-spooked.” Is it just a matter of time? or is the economy in need of more action. Its an election year so look for stimulus plans II & III.

The economy is flat as a pancake.


One Comment

  1. Jay Skinner February 9, 2008 at 6:54 pm

    The Federal reserve bank needs to drop the interest rates, maybe back to 1%. Once the economy stabilized, the federal reserve bank need to increase the rates gradually (not like they did before, a quarter point every time they meet).

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