The US Federal Reserve yesterday lowered its target rate by half a percent on overnight funds - commonly known as "fed funds" - for the ninth time this year, to 2.5 per cent.

This drop is significant, in that this is the first time funds have reached this low, since 1962.

Joel Schaefer, CFA and secretary of the Bermuda Society of Financial Analysts (BSFA) attributed the drop to the Federal Reserve's aggressive policy to help stimulate the economy.

The Federal Reserve lowered rates, Mr. Schaefer said, the first day the markets re-opened, after the WTC attack. He added that this latest drop was anticipated, and had, to a degree, already been reflected in market activity.

Meanwhile, Bermuda Savings and Loan announced a further reduction of half a percent in loan rates, effective October 1.

The rates for new one- and two-year fixed deposit accounts will be 4.25 and five per cent.

These rate changes follow rate changes already announced in the U.S. and Bermuda.

The company said it would - in light of challenges facing Bermuda's economy - write to all mortgage clients suggesting that appointments be made by any who feel they may be adversely affected by the downturn in Bermuda's economy - to discuss how Bermuda Savings and Loan might assist.