The Fed is shifting into "neutral."

We've established that long-term rates are not going down due to concerns about inflation. But what about short-term rates, the ones the Fed controls more directly? The news has been better there.

The Fed's cuts in the federal funds rate have helped bring down the London Interbank Offered Rate (LIBOR) and the prime rates quoted by major banks. That has helped lessen the magnitude of rate and payment adjustments for many adjustable rate mortgage holders. It has also lowered the rates on things like home equity lines of credit, which usually track the prime rate.