US Central Bank Cuts Key Interest Rate by Bold Half-Percentage Point
By Cindy Saine
Washington
18 September 2007


The U.S. Federal Reserve Tuesday cut key short-term interest rates by a half percentage point in an aggressive move to protect the economy from a housing slump and the related mortgage market turbulence. VOA's Cindy Saine reports from Washington.

The half percentage point cut in the interest rates that banks charge each other for overnight loans was bigger than the quarter-point cut many experts had anticipated, taking the federal funds rate down to 4.75 percent.

Alan Viard, a senior economist at the Federal Reserve Bank of Dallas and is now a resident scholar with the American Enterprise Institute, said he was surprised by the half-point reduction. "I think what the Fed has decided to do is just to take very aggressive action. And specifically to respond to what's going on in the financial markets," he said.

The New York stock market responded enthusiastically to the rate cut, with the Dow Jones industrial average rising more than 330 points by the end of the day Tuesday.

This was the first federal funds rate cut in more than four years. It is also the first for Fed Chairman Ben Bernanke, who is facing a major test with financial markets in turmoil. The Federal Reserve has been slowly raising interest rates over the past four years to fight off the threat of inflation.

Robert Scott, Director of the Washington-based International Programs at the Economic Policy Institute, said the Fed's bold rate cut reflects serious concerns. "Well I think the Fed is more worried than some have expected about the mortgage crisis and its likely effect on consumer spending. I think that crisis is going to get a lot worse before it gets better, and I think the Fed is well aware of this," he said.

Scott said he expects there may be more rate cuts to come, and he likened the U.S. economy to an aircraft carrier that is very hard to turn around once it is going in a certain direction.

The Fed's announcement came just hours after the release of a report from an online real estate company that said an increasing number of Americans are at risk of losing their homes to foreclosure.

The U.S. housing market has been affected by the rising number of people unable to pay off so-called sub-prime mortgages given to borrowers with weak credit.

http://www.voanews.com/english/2007-09-18-voa70.cfm

Not only that, Cdn and US $ are practically at par. Belize better get ready for even more Canadians arriving!

I know I'm pretty excited about it. It wasn't all that long ago I was buying US money for approx. $1.60 Cdn for $1.00 US. That sure made my BZ vacations pricey! But I loved it so, what could I do??

Just the beginning.

I watched Greenspan on the news last night talking about the problem was going to be that in 2006 the budget would be flush; we would have so much money the government would have to buy private wealth. He never considered using the surplus money to provide health care or other needy services to the homeless or anything beneficial to mankind. This whole scenario reminds me of the old 50's tv show "The Millionaire." Everybody was waiting for the knock on the door from Michael Anthony (we're still waiting) and his check for a million dollars that you had to spend within one year and not tell anybody where you got the money and give back what you didn't spend. It was just crazy; and , that's what's going in this world. I got a good idea, let's spend the money on a war with Iran.

ah, now you're on track(don't forget Syria)!

They might want to pay down that $9,000,461,329,297.77 in debt.

Source: http://www.treasurydirect.gov/NP/BPDLogin?application=np

Smart time to buy property!