Consumers Haven't Felt Effects of Fed's Short-Term Rate Reductions.

Publication: Daily News (New York, New York) (via Knight-Ridder/Tribune Business News)

Bookmark this article Print this article Link to this article Email this article Digg It! Add to del.icio.us RSS

COPYRIGHT 2001 Daily News

Byline: Judith Schoolman

May 21--When the Fed cut rates last week for the fifth time this year, investors jumped for joy and consumers bathed in a feel-good belief that the cost of borrowing money would immediately drop.

But now that the confetti has cleared, consumers are seeing little follow-through where it counts: mortgages, car loans and credit card rates haven't dropped as dramatically as short-term rates since January.

The five separate cuts by Alan Greenspan's Federal Reserve Board, designed to prod economic growth by making it cheaper to borrow, pushed short-term rates down 2.5 percentage points to 4 percent , a seven-year low, benefitting many businesses.

But the interest rates that affect you and me are in different categories and are affected by different factors.

"Most people are not getting the connection" between the Fed's rate cuts and the rates they are getting for home, auto and credit card loans, said Deborah...

Read the full article for free courtesy of your local library.