Johnston: Rate Cut A Pleasant Surprise

LAS VEGAS - The Federal Reserve's decision to cut the Federal Funds rate by 50 basis points was greeted with enthusiasm at WesCorp's Credit Union Outlook conference here last Tuesday.

Dwight Johnston, WesCorp's vice president of economic and market research, told the Credit Union Journal he was surprised by the magnitude of the rate cut, as many had assumed any reduction would be 25 BP.

"They cut it by 50, which is what they should be doing," he declared. "It is recognition of the conditions in the financial markets-particularly the credit markets-that could have a significant impact on the economy."

By making a 50 BP cut now, the Fed can watch developments for a month or two and gauge the move's impact, Johnston continued. "If they had done 25, everybody would have been waiting for another 25 at the Oct. 31 meeting. This hopefully will help things."