The Federal Reserve chairman Bernake lowered the fed funds rate by 50 basis points on Friday making it easier for banks to lend money to each other but not necessarily to consumers. The Federal Reserve has effectively made it cheaper and easier for banks to lend other banks money especially for loans of larger amounts such as Jumbo Mortgages and adds liquidity for the credit market. Perhaps Bernake should have done something about the funds rate earlier when the sub prime market started becoming a problem in March of this year. The financial institutions began making it harder to borrow money at about the same time. Why didn’t the Fed do anything then? I believe the rate cut will have a minimal effect on the mortgage market for now but I do like the fact that they are taking action on this crisis.
Federal Reserve Lowers Rates
August 20th, 2007 · No Comments