FED CUTS RATE TO AVOID PANIC

The Fed cut interest rate to 3.5% according to the LA (and NY) Times.

This is an effort to avoid panic in the face of a plunging stock market and fears about a US recession.

The federal funds rate is the interest rate that banks charge each other. It is an indicator towards where mortgage rates will go... There are scheduled meetings to assess and evaluate rate policy- but this change comes outside of a regularly scheduled meeting in which one member was absent, and the vote was not unananimous, according to the article.

Also, according to the Times:
~ The Fed hinted that it is ready to keep cutting interest rates if necessary in order to reverse the U.S. and global slide.
~ Policy makers worry falling markets will cause financial institutions to sell assets and reduce lending even further
~ The central bank has also made changes to the discount rate, which "has been lowered by three-quarters of a point to 4%."
~ The Fed started auctioning off short-term loans to banks to pump $ into the system and keep banks lending

Here is a link to the Fed's official statement.