Who Benefits From Yesterday’s Fed Rate Cut?
January 23, 2008 by Miranda Marquit
Filed under Finance
Yesterday saw an emergency Fed rate cut meant to help the economy. Whether it kicks start the economy or not, there are plenty of people who will see impacts in their personal finances from this move. Yahoo! Finance describes some of the areas that will benefit from yesterday’s Fed rate cut:
After the Fed’s rate cut Tuesday, banks quickly cut their prime rate — the rate they charge their best customers — to 6.5 percent. The prime rate also serves as a benchmark for credit cards and home equity loans, and those borrowers will benefit from lower rates.
Others to benefit include those with ARMs. Adjustable rate mortgages will have lower payments thanks to yesterday’s move, making them manageable for some of those experiencing mortgage resets.
For those with savings accounts and CDs, however, the news isn’t as rosy. Cash investments will yield less, and those whose retirement income relies on them may find inflation eating away at their returns.
Do you think the cut will actually spur the economy?
I don’t see it. I fear it will just lead to more lending, at a time when taking on more debt is not advisable for most people.
It probably will help a bit, injecting “confidence” into the market. And it will help in terms of the way that the economy is now BASED on more lending. We now have a debt-based economy that flourishes when people are in JUST ENOUGH debt to keep paying, but not enough to allow them to really concentrate on saving.
I’ve been saying: What’s good for our economy, as it is now, is not always good for most individuals.