Ask Clark: What Does the Federal Reserve Interest Rate Cut Mean to You?

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U.S. Federal Reserve icon on money
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The Federal Reserve made an emergency rate cut this weekend for the first time since the 2008 financial crisis.

Clark: Interest Rate Cut Means ‘Nothing’ to the Average Investor

In a rare move, the Fed voted Sunday to lower the benchmark federal fund rate from a range of 1 to 1.25 percent to a mere 0 to 0.25 percent.

Unfortunately, markets didn’t react as anticipated. The move failed to bolster investor confidence as U.S. stocks took a tumble at Monday’s market open.

That may be, in part, because money expert Clark Howard says the Federal Reserve’s move to lower its benchmark interest rate to near zero means “nothing” to the average investor.

“What really matters behind the curtain is that the Federal Reserve is making money available as essentially a bank of last resort to keep things functioning,” Clark told WSB Radio in Atlanta.

“We had a really odd thing happen a couple of days ago where mortgage rates skyrocketed overnight because people became afraid to put money up for mortgages.”

“There was so much uncertainty with the cascade of [news] that it seemed like we were getting hit in a boxing ring by five boxers beating on us at once. That’s kind of what it’s felt like to us as Americans [so] people kind of seized up. And financial markets did as well.”

“What the Federal Reserve will be doing — not just day by day but for weeks to come — is they’ll do what they need to in order to keep financial markets functioning and make sure that money is available for day-to-day activities.”

Up next for the Fed is a two-day policy meeting on March 17-18, where rates will again be considered.

Meanwhile, visit clark.com/coronavirus for updated financial-related information that you can trust.

And for the latest on the health crisis, follow the CDC, World Health Organization and reputable news sources.

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