Fed Cuts Rates 75 Basis Points

In a huge attempt to keep financial markets from collapsing, the Fed cut their overnight rate by 75 basis points, or three quarters of a percent. Given that a large rate cut has been 50 basis points since the Greenspan era of measured cuts, and this came between meetings, this can only be seen as drastic action on the part of the Fed.

While we're happy to see the Fed take action to keep the economy afloat, and we all love watching our HELOC and credit card rates drop (those that are tied to the Prime Rate), I am concerned that the Fed is cutting rates drastically when inflation is showing an uptick. The expectation of inflation can cause more inflation, so I'm concerned that if inflation gets out of control, we'll see dramatic increases in the rates later.

Use these lower rates to pay off your debts faster, not spend more money. The Fed's goal may be to get people to spend more, but if rates go up, you'll be in for a world of hurt if you took on a lot more debt during the low rate period.