Thursday, November 5, 2009

Fed Rate Cutting Cycles

The Fed's decision came just one week after the government reported that the economy grew in the third quarter, the first gain after a severe decline over the previous four quarters.

While it was widely assumed that the central bank would leave its federal funds rate in a range of 0% to 0.25%, economists and investors were eager to see how the Fed described the economy in its statement.

The Fed repeated language from earlier statements that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period."

The federal funds rate is a benchmark used to set the rates paid on a wide range of business and consumer loans, such as home equity lines and credit cards. It has been near zero since December 2008.

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