By Jason A. Smith
On the heels of a major decision by federal banking authorities to lower a key lending rate, financial institutions in Georgia are, reportedly, responding with measures designed with the customer in mind.
The Federal Reserve Board voted Wednesday to cut the prime interest rate by half a percentage point, to 4 percent. According to the Associated Press, the move takes the interest rate to its lowest level in four years.
The Federal Open Market Committee (FOMC) also lowered its target for the federal funds rate by 50 basis points, to 1 percent.
David Oliver, the senior vice president of communications and marketing for the Georgia Bankers Association, said lending institutions in the state are taking action, in light of the federal decisions, to maximize the benefit for residents.
"We're seeing banks around the state lower their prime interest rates," said Oliver. "That's good for consumers, because interest rates on credit cards, home equity lines of credit and other consumer loans, with adjustable rates, are likely declining."
The Federal Reserve issued a written statement regarding its recent decisions, and what the results will mean for banks and consumers. The Fed noted that economic activity in the nation has "slowed markedly," due largely to a decline in consumer expenditures.
"Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports," according to the statement. "Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
Lower energy prices, the statement continued, and fewer prospects for activity in the marketplace will cause inflation to "moderate" to "levels consistent with price stability." The committee will reportedly monitor economic and financial developments in the country, to "promote sustainable economic growth."
Oliver said it is "encouraging" to know the Federal Reserve is taking action to "shore up the economy. He added that time will tell whether the agency's move is a timely and positive one for the general public.