The Federal Reserve yields enormous power over the health of the nation’s economy AP Personal Finance Editor Trevor Delaney explains how setting interest rates is one of its most powerful tools.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.

2008 Monetary Policy Releases

Federal Reserve chairman Ben Bernanke heads to capitol hill today. He may encourage lawmakers to stimulate the economy.

Bernanke will appear before the house budget committee today. Legislators are set to question the fed chairman on steps to avoid the first recession since 2001. Bernanke may also try to avoid backing away particularly from tax or spending policies. analysts say doing so could earn him criticism from legislators who oppose them, in turn putting the fed’s reputation of independence at risk.

Bernanke may side step moves taken by former fed chairman Alan Greenspan, who said he misjudged the environment when he endorsed tax cuts in 2001.

Today’s Current Mortgage Interest Rates December 13 2007. Fixed mortgage rates are UNCHANGED from Wednesday December 12 2007, while adjustable mortgage rates are UNCHANGED - Today’s 30 Year, is UNCHANGED and 15 Year Fixed are UNCHANGED - while as the 5/1 is UNCHANGED the 3/1 ARM Mortgage Interest Rates are UP. The 10 year treasury bond is UP to 4.15%.

Ivanka Trump On Today’s Real Estate Market

Stocks Slide On The Federal Reserve’s ‘Lack of a Move’; UK Economy.

Asia shares slide after Fed cut. Dec. 12 - Asian shares fell Wednesday on disappointment with the size of US Federal Reserve rate cut. Financial stocks in the region in particular were hit, on ideas the 25-basis point move was insufficient.

The US Central Bank cut interest rates again in order to bolster the housing market and US economy. In its final meeting of 2007, the Federal Reserve cut interest rates for a third straight time. But Wall Street is saying “It’s just not enough”.

Tom Keene’s Chart of the Day: KBW Bank Index vs. Fed Discount Rate. The T-Bill Field Descends Lower Than August 20.

Federal Reserve’s Cuts Disappoint Wall Street Once Again. A big decline on Wall Street as the Fed cuts interest rates again, but less than some had expected.

# The Dow declined 294 to 13,432.
# The S&P 500 slid 38.
# The Nasdaq lost 66.