FED Cuts Federal Funds Rate by .25%

Contrary to what you’ll be hearing in some of the media outlets, this .25% cut in the funds rates does not equal a .25% cut in long term interest rates. Yes, it will affect short term rates like the Prime rate (this is the rate a lot of the Home Equity Lines of Credit – HELOC and credit cards are based on) and the LIBOR.

In fact, since the announcement was made, the Mortgage Bonds are actually showing signs that fixed rates will be rising tomorrow. Additionally, the expected non-farm jobs report to be released on Friday, 11/2/07 at 8:30 am EST is expected to be stronger than estimates and could trigger long term rates to rise even more.

Here’s a good article explaining what the FED talked about during their 2 day meeting and what their projections are for the economoy and inflation.

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