Fed Rate Cut Will Boost Auto Sales: Analysts
In a move which will likely be good for auto sales, the Federal Reserve cut short-term interest rates another 50 basis points, or ½-percent, on Nov. 6.
The 10th rate cut this year brought the total to 4½ percentage points of cuts in 2001. This was the third ½-point cut since Sept. 11 intended to stimulate the economy after consumer confidence was shaken by the terrorist attacks.
The move by the Federal Reserve takes short-term interest rates to their lowest level in 40 years.
"Heightened uncertainty and concerns about a deterioration in business conditions both here and abroad are damping economic activity," the
Federal Open Market Committee said in a prepared statement.
Lower interest rates boost auto sales by making it cheaper to borrow money. Besides the
direct effect on consumer loans, lower rates also make it more economical for automakers to offer incentives such as the present wave of zero-interest loans.
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