In a unanimous decision, the Federal Open Market Committee today voted to lower the target for the federal funds rate by 50-basis points to 4.75%. Within moments the Dow Jones Industrial Average leaped more than 200 points to 13607.62, the S&P 500 jumped 27 points to 1504.29 and the Nasdaq Composite Index added 43 points to 2624.99.
“The implications are worrying,” says Joseph Trevisani, chief market analyst for FX Solutions LLC, adding that so far Federal Reserve Bank chairman Ben S. Bernanke has been prudent. “This really means that the Fed is genuinely concerned, you put this in the context of their previous reluctance and you have a completely different economic landscape,”
In the press statement, the Fed says tight credit could intensify the housing correction and dampen economic growth more generally, and that the cut is intended to ease adverse effects on the economy, calm the markets and promote moderate growth; and while core inflation has moderated, some inflation risks remain.In addition, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5.25%.
More to come…
Tags: Federal Reserve Bank, FX Solutions
