Major banks lower lending rates
May 1, 2008 - Nashville Business Journal
The Federal Reserve cut the federal funds rate 25 basis points to 2 percent due to further weakening of economic activity.
The Federal Reserve's Open Market Committee voted 8-2 to cut the rate as recent information indicates slowing growth in consumer spending as well as some softening in labor markets.
"The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity," the Federal Open Market Committee says in a written statement. "The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."
Loans to business borrowers are tied to the prime rate, which is 3 percent above the federal funds rate. Thus, with yesterday's decrease, the business borrower, if paying prime, is now paying 5.25 percent.
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