The Federal Reserve slashed the federal funds rate by three quarters of a percentage point this morning, the largest single rate cut since October of 1984. \u00a0The move by the Fed to drop the rate from 4.25 percent to 3.5 percent came at an unscheduled meeting Tuesday, just over a week before the next scheduled meeting on Jan. 30. The Fed also lowered the discount rate, or the rate at which banks can borrow from the central bank, by three quarters of a point, to 4.0 percent. \u00a0Gary Gabriel, managing director of the capital markets group at Cushman & Wakefield Inc., said that both the timing and the magnitude of the rate cut indicate that the Fed wants to convey that it is concerned about an economic slowdown and is willing to take whatever steps are necessary to try and head off a possible recession. \u00a0\u201cWhen you consider the data that has come out as of late and the persistent challenges of the credit markets,\u201d Gabriel noted, \u201ca reaction of some magnitude by the Fed could have been expected.\u201d He pointed to December\u2019s weak employment and retail sales performances as amongst the data that spurred the Fed to make the cut. Gabriel (pictured) noted that, by making a three quarter point cut, the Fed was likely making a statement. \u201cA 25 or 50 basis point cut would have been perceived as more of the same,\u201d he said, \u201cand they wanted to send a message.\u201d The rate cut aims to engender confidence in the U.S. economy not just domestically, but internationally as well. \u201cI think the markets, globally, were looking for some support for the U.S. economy,\u201d Gabriel said. Indeed, the cuts came just a day after international markets declined sharply while the U.S. market was closed for the Martin Luther King Jr. holiday. Stocks tumbled on Wall Street immediately following the announcement, but by the earlier afternoon had bounced back a bit. The emergency rate cut was the first since the wake of the Sept. 11, 2001 terrorist attacks, when rates were slashed amidst the ensuing financial panic. The Fed still plans to meet on Jan. 30, and many observers expect yet another rate cut at that time.<\/p>\n","protected":false},"excerpt":{"rendered":"
The Federal Reserve slashed the federal funds rate by three quarters of a percentage point this morning, the largest single rate cut since October of 1984. \u00a0The move by the Fed to drop the rate from 4.25 percent to 3.5 percent came at an unscheduled meeting Tuesday, just over a week before the next scheduled…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1003699836","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"yoast_head":"\n