The Fed lowered the Fed Funds Rate by 0.250%. The rate decrease was not well-received, though, as many investors were calling for a deeper cut of a half-percent.
In response, dollars moved from stock markets to bond markets and, therefore, mortgage rates fell.
Because it is tied to the Fed Funds Rate, Prime Rate fell by 0.250% yesterday, too. Holders of home equity lines of credit and credit card debt benefited from the change and will see lower interest costs in next month’s statements.
In the statement above — as explained by The Wall Street Journal — the Fed expresses concern about the consumer and business slowdowns. This leaves the possibility of future Fed Funds Rate cuts open.
Parsing the Fed Statement
The Wall Street Journal Online
December 11, 2007