Another problem with the BBC report is that they conflate the two rate cuts.
They are both interest rates, but affect the markets differently.
The 75 basis point cut last week was the fed funds rate, which is the rate used to calculate lending between banks.
The rate cut yesterday affects the rates banks use to calculate interest for everyone else.
The first cut was to stabilize the financial markets because of the SG meltdown. The second was to help the US domestic markets.
Actually Lawhawk, the Fed only controls the discount rate. The Fed Funds rate is the rate banks charge each other. The Federal Reserve Bank can indirectly impact the Fed Funds rate by expanding the money supply via open market operations, but they do not set the Fed Funds rate. There tends to be a lot of confusion over that.
Their cut last week was to the discount rate.
Commenting by HaloScan
