Fed Cuts Key Rate

Ben Bernanke, who is the chairman of the Federal Reserve, announced that the Fed would use "all avialable tools", and take unprecedented measures to ensure that lending does not come to a screeching halt, which would devastate our economy. The Federal funds rate, or inter-bank lending rate, was reduced more than expected to between 0-.25%, the lowest in history. The Fed also announced that it does plan to purchase upwards of $600 billion of direct debt from Freddie and Fannie to help increase the amount of lending they are able to do. Investors loved this news and it showed when the DOW climbed just over 350 points in afternoon trading. This is good news also for average consumers, becuase right now lending is still pretty tight; if Freddie and Fannie are able to charge very low rates, they would force other banks to also begin lending or face going out of business. Lending at similarly low rates would be the only way banks could stay competitive. Hopefully this all unfolds sooner than later.