December 16, 2008, West Palm Beach, FL (JusticeNewsFlash.com)–Top news story: The United States Federal Reserve announced today the key interest rate cut to a range between zero percent and 0.25 percent. This is the first time in American history the Fed has cut rates below 1%. This marks the tenth Fed rate cut in the last 15 months. Earlier Tuesday, the U.S. Labor Department reported the Consumer Price Index, its key inflation measure, fell by a record 1.7% in November, 2008.
The federal funds rate is an overnight lending rate used as a benchmark to set rates for a variety of loans. These loans include adjustable rate mortgages, credit cards, home equity lines of credit and business loans.
The federal fund rate is the key tool the Fed uses to spur or slow the economy as it tries to balance its dual goals of economic growth and price stability. Lower rates are designed to encourage American consumer spending by making borrowing more affordable. Higher rates can keep prices in check by slowing the economy.
Legal finance experts are expressing concerns with fed funds rate so close to zero leaves the Fed with little room for additional moves if the economy does not start to show signs of improvement soon. Several banks also announced they were lowering their prime rate to 3.25% after receiving the Fed rate cut news.
Media Contact: Justice News reporter covering U.S. Federal Reserve news