Fed cuts interest rate by 3/4 of a point to 2.25% 
This is a pretty big deal. I’m not nearly economically educated enough to realize the full implications, but it should mean lower loan and mortgage rates. It also makes stocks more attractive for a number of reasons, so stocks should go up.
With the latest reduction, the federal funds rate is far below the rate of inflation, meaning that the “real,” or inflation-adjusted, rate is below zero. It is also well below the European Central Bank’s benchmark interest rate of 4 percent or the Bank of England’s rate of 5.25 percent.
That, however, could be troublesome — again for reasons I’m not qualified to understand or explain. With this, the government could borrow money, stick it in a no-risk inflation-based investment such as a CD, then pay it back… and make a profit. Something tells me that’s not a good idea.
But if I figure correctly, this should also send CD and savings rates plummeting. Do you have one of those “high-yield” savings accounts from ING or HSBC Direct? Expect a friendly email soon to tell you that the rate is decreasing to something pathetic. (I’d be surprised to see any savings account offering more than 2.5% in a few weeks.)
Marco, it doesn’t mean lower rates for mortgages. What has been happening is that banks, in fear of inflation, up the rate. This is because they feel that their interest will be worth less and they will need to compensate by charging more. I happen to be talking about this just the other day with someone.
via marco