Rep. Cantor applauds interest rate cut

Media General News Service / Culpeper Star Exponent
Published: January 22, 2008

WASHINGTON - Virginia Republicans applauded a move by the Federal Reserve to slash a key interest rate Tuesday in an effort to shore up what it called "a weakening of the economic outlook."

The surprise reduction in the federal funds rate from 4.25 down to 3.5 percent marked the biggest funds rate cut on records going back to 1990.

"It is welcome news for investors, particularly homeowners. You can see this is good news for the economy," Rep. Eric Cantor said following the Fed's announcement.

Federal Reserve Chairman Ben Bernanke and his colleagues took the action after an emergency video conference Monday night, a day when global markets had were pounded by rising concerns that weakness in the world's largest economy was spreading worldwide.

"I do think global investors recognize the Fed is doing everything in its power to get the economy back on track," Cantor said.

But Rep. Jim Moran, D-8th, did not think the rate cut would inspire an influx of investment as hoped.

"It's very hefty," he said. "We've got interest rate so low, I'm not sure how much more the Fed is able to do or is going to do.

I'm afraid the Fed has shot its load now, and I don't think it has a lot more powder in its cannon."

Rep. Virgil Goode, R-5th, said the rate cut will have short-term benefits, but for long-term economic stability the U.

. must reduce its dependence on foreign energy sources.
"I think that there will be a positive effect, but long-range our country has to rid ourselves of our dependence on foreign fossil fuels," Goode said. "We need to fully explore alternatives in the 5th district of Virginia - switch grass, canola oil. We need to keep promoting those so we don't have such an outflow of dollars to the Middle East."

Neil Simon and The Associated Press contributed to this report.