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Fed’s short-term rate cuts fuel stock market rally

Actions not expected to help long-term mortgage rates

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The Federal Reserve today cut 75 basis points from two key short-term interest rates -- a move that in less turbulent times would have been viewed as a drastic measure, but which fell short of some investors' expectations for a full 1 percent cut. The Fed's actions fueled a stock market rally, but aren't expected to have an impact on long-term interest rates like mortgages until investors who fund loans return to the secondary market where they are bought and sold. The decision by the Fed's Open Market Committee to lower its target for the federal funds overnight rate from 3 percent to 2.25 percent -- and to cut the discount rate to 2.5 percent -- makes money available more cheaply to banks and financial institutions. The Fed has now cut its target for the federal funds rate -- the rate banks charge each other to lend money overnight -- six times since September, when it stood at 5.25 percent. In a statement, the committee said that financial markets "remain under c...