Fed Cuts Rate by 50 Basis Points

October 29th, 2008

The FOMC cut the Fed Funds rate today by 0.50% (50 Basis Points). That puts Fed Funds at 1.00%. This follows an earlier cut of the same in the beginning of October.

It will be interesting to see how this affects CD rates. The last cut mainly had an effect on the 90-Day and less CD Terms. 1-year and longer CD Rates remained the same. We expect a similar reaction.

The fact is many banks need the liquidity and competition will continue to keep the rates fairly high compared to Fed Funds. 1-year and longer rates may drop about .25%.

cd :O)

-- By +Chris Duncan

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