The Fed cut a key interest rate by .5%. What does it mean?

Answer 1

It means the economy was slowing down a bit due to all the rate increases throughout the year..........

Answer 2

Richly is right: THE DOLLAR IS TOAST.
Others explained why the cut happened: lack of liquidity caused by the subprime crisis (Banks are having a hard time paying what they owe to each other).
Others have also explained what it will mean to you: Profits for stockholders and breathing space for debtors. Inflation for everyone.
Richly explained what it means to international investors: the dollar is losing value.

What does it mean as a whole? Foreign governments have stocked their reserves in dollars since WWII. Oil has also been traded in dollars since. The fed's action is affecting international trust for the dollar.

Well I am no eaconomist... but Mike Whitney is!
http://www.counterpunch.org/whitney09182007.html
It was published before the rate cut, about a couple of hours before. It warns against exactly that measure.

Peace.

Answer 3

Financialy for you :

cheaper interest rates have meant lower montly payments on new debts that you create using credit,

but in this case,

It just means,that the fed has been forced to clean up the mess left by the greed of lenders that created mortgage products that were pushed on unknowing consumers that had no idea what they were getting,

with the disapperance of sub prime products, and credit score requirements being hiked, the feds rate reduction @ .500% will do little,

in my opinion, the needed cut should be closer to 1.00% instead to spur a return to a more even market .

Answer 4

That means the Fed is under huge amount of pressure to bail out financial institutions from bankruptcy and home-owners from losing their homes (and ending up in the hands of the mortgage lenders and banks).

That means higher inflation is up ahead as the Fed pumps 'easy' money into the economy to bail out the financial institutions.

That means higher energy prices and higher prices for anything that needs energy to produce and transport.

That means higher prices for gold, the inflation hedge, because people will buy gold to counter the drop in value of their dollar currencies.

That means people will sell the dollar and buy euros and other currencies including the canadian dollar, the chinese yuan, the japanese yen, the brazillian real, and the australian dollar.

That means the dollar is toast.

Answer 5

We are in trouble and this is a temporary band-aid.

I just wonder how long these heroic events will last before people face the truth.

Answer 6

It means all aspects of the economy are suffering at the hands of the Democrats!~!

Answer 7

Not much context to the question.

If you are borrowing money it will be cheaper and easier for you.

If you own stocks (pensions, 401k, private accounts, etc.) you made a lot of money today.

Answer 8

It means that the economy won't go into recession as fast as it would've--had the Fed not come to the rescue.

So all they've done is delay the inevitable.

Answer 9

It means traders needed a token to keep them from screwing us.

Answer 10

It will be slightly cheaper for people who want to borrow money.