Money market mutual funds are breathing a sigh of relief as they dodged a bullet in the form of a potential 50 basis point reduction of interest rates by the Federal Reserve at its meeting in late June.

With many market and economy watchers calling for a half-point reduction, the Fed opted to act conservatively, dropping the rate by only 25 basis points, bringing the prime-lending rate to a flat 1%, for now. A larger slice would have caused some major problems in the money market fund industry, a significant portion of which might have had to surrender fees in order to bring a positive return to investors.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.