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 December 13, 2007

Federal Reserve Rate Cut Causes Dow to Plunge
In an effort to make the cost of borrowing money more affordable for home buyers in San Diego as well as the country, the Federal Reserve Board cut its benchmark short-term interest rate by a quarter of a percentage point on Wednesday, December 11. The markets responded poorly to the announcement which was intended to halt the current credit crisis from spilling over into other areas of the economy. As a result of the announcement, the market plunged 294 points by the end of the day's trading.
The one-quarter of a percentage point reduction was less than was expected by Wall Street, and set off a selling spree that sent the Dow Jones Industrial Average into a fall of 2.14%.

Some Wall Street executives are critical of the Federal Reserve Board's actions stating that everyone seem to realize that the predominant concern of today is the risk to economic growth being negatively affected by the Fed's rate cuts.

The next meeting of the board is scheduled for two days in January.

Some market analysts speculate that the San Diego market is likely to be of the first to recover from the current housing slump, as the county was among the first to be hit when the situation began. Prospective home buyers should pay close attention to these cuts in interest rates and begin to shop around for the best mortgage opportunity.

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