Fed cuts rates; stocks plunge!

[Guest]

Fed cuts two key rates a quarter-point

WASHINGTON — The Federal Reserve cut two key interest rates by a quarter-percentage point Tuesday to the lowest level in nearly two years in a bid to prop up a shaky economy and prevent a serious credit crunch from stifling consumer and business lending.

In a 9-1 vote, Fed Chairman Ben Bernanke and his colleagues cut their target for the federal funds rate, their main economic tool that influences borrowing costs across the economy, to 4.25%. It was the third cut from the Fed in less than three months and brought the rate to the lowest level since January 2006.

Stocks dove on the news. Many investors were hoping for bigger cuts and a more aggressive statement, showing greater willingness to cut rates to alleviate credit problems worldwide.

Boston Fed President Eric Rosengren voted against the quarter-point cut. He wanted a larger, half-percentage point cut in the federal funds rate, what banks charge each other for overnight loans.
...
http://www.usatoday.com/money/economy/2007-12-11-fed-quarter_N.htm