Another Interest Rate Cut

In light of the Federal Open Market Committee (FOMC) vote today to lower the target federal funds rate 25 basis points to 4.5% and to cut the discount rate 25 basis points to 5%, we conclude two things:  1.  The subprime mortgage related problems in the financial markets are deeper and will be with us for longer into the future that we could have foreseen even six weeks ago; and 2.  Distress cries from investors in these collateralized debt obligations (CDOs) do get the Fed's attention, despite previous statements that seemed to indicate reluctance to bail out investors who made poor decisions.

Link to FOMC Statement:  http://www.federalreserve.gov/newsevents/press/monetary/20071031a.htm

(ag) Oct. 31, 2007, in Economy/Interest Rates