fed-cuts-5-as-expected-rates-up

The first Fed meeting of 2008 ended today with another cut to short term interest rates. In addition to the .75 emergency cut last week, the Fed cut another .5 today, in a move anticipated by the markets. The stock market has rallied a bit this afternoon and this has forced the bond markets to retreat, bonds are currently down and interest rates are likely to rise today by .125 to the price. After the FOMC meeting, a statement was issued detailing the continued economic concerns the Fed has, and the possibility of more rate cuts. Today we got the 4Q GDP preliminary reading of .6%, half of what was expected, and more indication that the economy is in bad shape. This is great news for mortgage rates. Tomorrow we'll get the 4Q Employment Cost Index, which should give us a sense of wage prices and detect any threat of wage inflation. Tomorrow also brings January Personal Income and Outlays reports which details consumer spending.