Fed: Emergency cut

The Federal Reserve, working in coordination with other central banks worldwide, enacted an emergency interest rate cut on Wednesday. The Fed lowered its fed funds rate by half of a percentage point to 1.5%.

By lowering this rate, money gets pumped into the economy because borrowing costs go down. In their statement the Fed said, "The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability."

Rate cuts by the Fed always lead to concerns about inflation. Although inflation has been high, the Fed believes that the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.

This aggressive action by the Federal Reserve is the latest attempt to get the economy turned around. For more information about the St. Louis housing market, call me at 314 267 2636.