Sunday, April 20, 2008

Interest Rates Drop

The Federal Reserve cut a key interest rate by three-quarters of a point, resulting in two months of Fed's most aggressive action in 25 years, to battle a spreading credit crisis. Wall Street loved it, bursting to its biggest gain in five years. The strong Fed action seemed to convince investors, at least temporarily, that the central bank will do anything it can to keep the country out of a steep recession. The reduction triggered announcements from commercial banks that they were cutting their prime lending rate from 6 percent to 5.25 percent . This rate is the benchmark for millions of business and consumer loans. Can this drop of interest rates and boosting stock market end or prevent the recession? Can this spur spending in the general public?

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