Fed cut rates by .75%

The Federal Reserve cut interest rates by .75% in their regularly scheduled meeting on Tuesday, March 18, 2008. Stating that the economic outlook is not good, the Fed indicated that more rate cuts could be on the way.

The short-term rate is now down to 2.25%, down from 5.25% in September. The Dow went down at first, but then rose to an astonishing gain of 420 by the time the markets closed.

Many economists were predicting a full point cut and were surprised with the 3/4 cut.

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Fed Ready to Cut Rates Again

Ben Bernanke

With oil prices hitting record highs ($100.88) and the dollar falling to $1.51 for 1 Euro, the Federal Reserve is talking about interest rate cuts again. Many are predicting a .5% cut again with the term stagflation resurfacing in economic conversations.

According to Wikipedia, stagflation is a “term used to describe a period of inflation combined with stagnation (that is, slow economic growth and rising unemployment, possibly including recession). This term first came to be recognized in the 70’s.

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