Another Holiday Gift From the Fed

The Federal Reserve Board cut its target for the federal funds rate by 25 basis points to 4.25% at its meeting today, December 11, 2007. It was the third consecutive rate reduction by the Fed, following on the heels of a 25 basis point cut at its last meeting in October. However, the stock market reacted negatively, as many on Wall Street were hoping for a larger rate cut. The Fed's closely watched statement indicated "economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending." It also stated "strains in financial markets have increased in recent weeks." The Fed added "some inflation risks remain and they will continue to monitor inflation developments carefull