Fed Knocks Down Interest Rates
(UNDATED) - The federal reserve bank shaved a quarter point from the federal funds rate, knocking it down to 2%.
Commercial banks then cut their prime lending rates to 5%. Both rates are about where they were in late 2004. The cut can affect some credit cards, home mortgages and other loans.
Denny Smith, of The Mutual Fund Store in Indianapolis, says the fed's primary role has evolved into protecting the banks and stabilizing the economy. It's more traditional role of guarding against inflation has taken a backseat. Smith says that has contributed to the higher prices at the gas pump and the grocery store.
The fed has been cutting rates since last September. Economists say we may not see any more interest rate cuts as the fed focuses its attention on managing inflation.
Denny Smith says he thinks any recession we have will be a shallow one.
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