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Fed Cuts Key Interest Rate To 1%: Trick or Treat? Asks Informa Research Services.

CALABASAS, Calif. -- Today, the Federal Open Market Committee announced that it would whittle its key interest rate by 50 basis points down to 1.00%. The last time the Fed funds rate was this low was June of 2003. Informa Research Services, Inc., asks, "Is this a terrible trick or a splendid treat for consumers?" (http://owners.com/mortgagerates/, http://bankingmyway.com/)

This key interest rate, in turn affects Prime rate, which is typically lowered to ease the credit market and make it cheaper for consumers to borrow money. The Prime rate is often used as an index in calculating short term loans such as auto loans, home equity lines of credit, and credit cards.

Whether or not this cut is going to improve the current struggling economy is anyone's guess. For instance, historically, mortgage rates tended to correlate with the Fed funds rate, but as of late, this has not been the case. The best way to keep an eye on mortgage and equity rates is to check convenient rate tables regularly.

Furthermore, deposit rates tend to follow the Fed rate very closely when it is on the decline. However, financial institutions will most likely continue to offer attractive promotional rates which you should definitely take advantage of. The best way to find out what financial institutions are offering in your area is to check online rate tables periodically.

The effects of the Fed's decision will have to be watched carefully, but by staying educated and vigilant of what current rates are, you can ensure you get the sweetest deal available in any economic situation.

Permission is granted to reprint this release in part or in its entirety as long as source credit is properly listed.

About Informa Research Services, Inc. (www.informars.com)

Since 1983, Informa Research Services, Inc., has provided the financial industry's most extensive array of market research and decision-support information.
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Publication:Business Wire
Date:Oct 29, 2008
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