January 25th, 2008
As you may have read, Tuesday’s drop was the biggest since October 1984. At that time it was dropped about 1.25%, from 11.30% to 9.99%. There was also another drop of about 1.00% in December. Rates went from 9.43% to 8.38%.
Reading deeper than the numbers, the actual effect of the drop is interesting. The October drop was about 11.6%. The December was about 11.1%. The first January 2008 drop (there may be a second one, they are saying) was a 17.6% drop. So our 2008 cut was much larger as a percentage. However that still isn’t the largest % drop. June 2003 was pretty high when it went from 1.25% to 1.00%. That was a 20% drop. The award so far goes to November 2002. It went from 1.75% to 1.25%, a 28.6% drop.
If the Fed does drop rates again next week hysteria, I mean history,may truly be made. If they drop a quarter, that will be a 23.5% drop in a single month. If they drop .50%, that will be 29.4%. And then Janaury 2008 will be the new winner.
I invite you to dig into the above links and let me know what you find.
-- By +Chris Duncan