Current prime rate cut to 1.5 percent: Dow Jones volatile

The Federal government reduced its key prime rate from 2 percent to 1.5 percent. In Europe, who is also being battered by the financial crisis, the European Central Bank dropped half a point down to 3.75 percent and the Bank of England cut their rates by half a point to 4.5 percent, this comes as governments around the world to help secure the global economy from collapse.

As the rate cut announcements were made Wall Street went on a roller coaster ride. The Dow Jones industrial at times shooting up more than 100 points or tumbling more than 200. Markets plummeted overseas as worries that the rate cuts wouldn’t have an immediate positive effect from the financial fiasco.

The Dow Jones Industrials rose 85 points in afternoon trading after losing 875 points this week. Henry Paulson the Treasury Secretary said that the need to implement the governments $700 billion rescue is needed immediately outlining that the global markets still remain heavily strained.

The US governments cut in the interest rate will immediately help millions of US bank customers whose mortgages are tied to the prime interest rate. Wells Fargo, Bank of America and other US banks cut their prime rate by half a point to 4.5 percent after the US government’s announcement.

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