FORT WAYNE, Ind (Indiana's NewsCenter)-In an unprecedented move Tuesday, the Federal Reserve cut its key interest rate to a level that's never been seen before. Federal Reserve Chairman Ben Bernanke is now calling this recession the worst financial crisis since the 1930's.
The fed cut it's key interest rate to a range between zero and .25% and said it will likely stay that way for a while. The record setting low rate isn't the only move the Federal Reserve made Tuesday that caught many analysts off guard. It also set the rate at a range instead of a specific number. The fed also announced it will begin purchasing more long-term U.S. treasury notes with additional moves expected in the future. The rate is used as a benchmark to set rates for a variety of loans, including adjustable rate mortgages, credit cards, home equity lines of credit and business loans. This marks the tenth time it has cut rates in the last 15 months.
Economics Professor, David Dilts, says Tuesday's move by the Federal Reserve "means we are heading into the teeth of a very nasty recession."
Dilts says "The fed does not engage in these types of monetary policies unless they see coming down the road in the next quarter or two dire economic straights."
Some analysts predicted we would start recovering from this recession sometime during the second quarter of 2009 but Tuesday's rate cut may be an indicator the recession may be even longer now.
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