The FOMC made its rate cut today and delivered on 0.50% on both the FED FUNDS and on the discount rate, so now Fed Funds will be targeted at 3.00%.  Wall Street economists had been expecting a 0.50% rate cut down to 3.00%, so this was right in line with what the markets were hoping for.

Some brief comments were as follows:

• financial markets remain under considerable stress;
• credit has tightened further for some businesses and households;
• recent information indicates a deepening of the housing contraction as well as some softening in labor markets;
• expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation…

You can see the full statement here.

At 2:10 PM EST, about 5 minutes before the scheduled FOMC time, these were the market levels:
DJIA               12,447.46  (-32.84; -0.26%)
S&P500        1,358.17   (-4.13; -0.30%)
NASDAQ       2,348.33   (-9.73; -0.41%)
10YR-Bond   3.697%     (+0.0390)

The markets have rallied after this announcement, mostly as the tone of this announcement does not eliminate further cuts in the future.

Jon C. Ogg
January 30, 2008