Fed cuts interest rate to unfreeze credit market

The wild ride on Wall Street continued Wednesday on the announcement the U.S. Federal Reserve issued an emergency interest rate cut.The Dow dropped more than 200 points in its first minute of trading

News 12 Staff

Oct 8, 2008, 11:57 PM

Updated 5,756 days ago

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The wild ride on Wall Street continued Wednesday on the announcement the U.S. Federal Reserve issued an emergency interest rate cut.The Dow dropped more than 200 points in its first minute of trading and fluctuated throughout the day before closing down nearly 200 points.
The half-point cut is part of a global effort to ease recession fears. In addition to the Fed, the Bank of England and European Central Bank also slashed rates in the first coordinated action since the Sept. 11 terror attacks. Japan?s stock market plunged more than 950 points to have its worst day ever and the Indonesian market was shut down after falling more than 10 percent.
The Fed?s rate cut is meant to ?unfreeze? the credit market, making it easier for residents to get mortgages, car loans and other forms of credit. Treasury Secretary Henry Paulson conceded it will take time to get the economy back on track though.
Some on Long Island say they aren?t sure the cut will thaw things out. Richard Cohan, a CPA, says he isn?t sure what effect the Fed rate cut will have on the Island.
?Unfortunately, it?s probably not going to trickle down that much to the average person on Main Street as they talk about, because the economy isn?t generated strictly by an interest rate,? Cohan says.
Long Beach resident Steven Koerner, who works in the mortgage industry, says to get a mortgage, people still need to have a good down payment, credit score and income.
?The biggest problem now is availability of credit, it?s not the actual interest rate, it?s getting people qualified for a mortgage,? Koerner says.Paulson says he is trying to put together a meeting with top international market regulators this weekend to discuss ways to deal with the global credit crisis.
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