Federal Reserve Board lowers Interest Rate To Near Zero.

POSTED: Tuesday, December 16, 2008 - 10:24pm

UPDATED: Wednesday, March 17, 2010 - 11:00am

WASHINGTON - In a radical, unprecedented move, the federal reserve board lowered the interest rate to near zero.

It's the first time in its history that the federal reserve has set a target for short term interest rates this low.

What this means is the rate that banks use to lend to each other is now even lower than expected.

In addition to the rate cut, the fed said it's prepared to expand a plan to buy large amounts of debt issued or guaranteed by government-sponsored housing mortgage agencies.

Pushing the federal funds rate down to zero doesn't mean everything comes with zero-percent financing.

It means banks can now raise cash for very short periods without paying interest.

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