As expected, the Federal Reserve cut its funds rate to 4.75%.
While this give a psychological boost to Wall Street, the fundamental problems in the housing and credit markets remain. This may help some with adjustable rate mortgages or home equity lines of credit, but the new and used home sales will not miraculously respond with significantly greater activity.It's the right direction, but as I said previously, I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
Unless the bottom end of the housing chain can purchase homes, the rest of the chain will stay slack... and that will continue to be a major drag on the economy...