Federal Reserve Slashes Fed Funds Rate by 75 basis points to 2.25pct

The Federal Reserve has just announced that the Federal Funds Rate is being but from 3.25 percent to 2.25 percent, a massive cut of 75 basis points.

The Fed has cut rates so dramatically in light of the worsening US economy and turmoil in the financial sector. The fed rate cut is aimed to give some relief to struggles banks and financial institutions and provide some reassurance to worried investors, especially with Bear Stearns almost going bankrupt just two days ago.

However not everyone is convinced.

Market analyst Sam Kirtley believes that the fed rate cut will have no positive impact in the long run and may in fact be making the situation worse, “The Federal Reserve has been cutting rates for over six months, and the market is lower than it was back then, so the rate cuts, no matter how dramatic, are not helping. They are actually having an inverse effect as lower interest rates are sending inflation numbers through the roof and the US dollar into further the Abyss. We have been recommending gold as an investment to our subscribers as a way to protect your wealth and profit from the crisis; the yellow metal has risen from around $600 to over $1000 in the last six months.”
Sam Kirtley writes The Gold Prices Newsletter, click here to subscribe or visit www.gold-prices.biz

Do you think this fed rate cut will help the economy and financial markets?

By cutting the federal funds rate by 75 basis points, will this solve the subprime mortgage crisis?

Voice you opinions by posting a comment below.