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Interest Rate Cut Is Large; Your Slice Isn't In Your 20s And 30s In Your 40s And 50s 60 Or Older

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The Tampa Tribune

Published: September 19, 2007

Ben Bernanke is just not that into you.

Local experts say the Federal Reserve Board chairman probably was thinking about reassuring Wall Street and comforting the beleaguered credit markets Tuesday when he and his colleagues lowered the federal funds rate by half a percentage point.

They say Bernanke's cut might delight people in lower Manhattan and Washington, but it won't put more money in your wallet. Nor will it make a huge difference to local businesses or the Tampa Bay area's economy, they say.

Your expectations probably will depend on what stage you're on in life. Just don't expect too much.

Dave Simanoff

If you've accumulated debt because you're starting a family or are paying for your education or have just purchased a house, you might be in luck - a little bit of luck. Debt payments tied to short-term interest rates may come down slightly as lenders follow the Fed's lead. Payments tied to long-term interest rates could come down soon, but don't hold your breath.

You've been saving your money in a diversified, balanced portfolio, right? As long as you're not just socking away all of your investments into one type of asset (technology stocks, bonds, real estate, Franklin Mint collectors' plates), you should be protected if certain industries ail because of the Fed's rate cut. Don't expect too much relief in your credit card bills.

Like everyone else, you shouldn't look for too much of a reduction in interest rates. However, if you've been stashing your retirement money in certificates of deposit, you may want to reconsider when it comes to renew. The lower federal funds rate probably will mean lower returns for CDs.

Sources: Interviews with Jerry Divers, president, Bank of Tampa; Greg Ghodsi, senior vice president of investments, 360 Wealth Management Group of Raymond James & Associates; Katie Pemble, interim president and CEO of the Bank of St. Petersburg

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