La Jolla Real Estate, Del Mar real estate, Rancho Santa Fe Homes, Carmel Valley Real Estate, University City and
Downtown San Diego real estate, homes and condos for sale in California - Ruth Mills & the Mills Team, REALTOR.






Search the San Diego MLS
(includes all areas in San Diego County)



 August 21, 2007

Federal Reserve Cuts Discount Rate
On Friday, August 17, in an effort to stabilize the financial markets, the Federal Reserve cut the discount rate that banks are charged when the Fed makes direct loans to them from 6.25% to 5.75%.
The important federal funds rate, which has held at 5.25% for over a year, was not changed by the Fed. The Fed however, did send a strong signal within the wording of a statement that the board was prepared to cut that as well.

The Federal Reserve referred to the "downside risks to growth" and that these risks have "increased appreciably." The board did not mention inflation, which prior to this cut was the main reason for not making a change.

Consumer interest rates will not see a major impact as a result of the cut. A cut in the federal funds rate however, would trigger an immediate drop in banks' prime lending rate, which is the benchmark for consumer and business loans.

The cut in the discount rate is expected to help with the severe cash crunch which currently faces many businesses, which includes mortgage companies which are experiencing trouble getting loans for short term financing needs.

Back to Real Estate News

Search San Diego Real Estate