Following the Federal Open Market Committee’s surprise cut in the federal funds rate by 75 basis points to 3.50% on Jan. 22, tax-free money market funds ended the first month of 2008 on a positive note, reporting inflows of $939.5 million for the week ending Jan. 29, according to the Money Fund Report.

The strong inflow activity brought the total assets under management among 550 funds included in the report to $483.24 billion. In the prior week, the 551 tax-free funds in the report suffered outflows of $590.7 million ahead of the fed action, which accounted for $482.31 billion of assets under management.

Average seven-day yields over this period were 2.45%, down eight basis points from 2.53% the week ending Jan. 21, according to the report from

In the prior two consecutive weeks of this year, the tax-free funds posted record gains, which combined totaled nearly $15 billion.

Taxable money funds, meanwhile, had inflows of $56.96 billion, putting total net assets at $2.782 trillion, compared with inflows of $43.27 billion and total net assets of $2.725 trillion in the previous week, the report said.

Meanwhile, the 1,821 money market funds combined saw $57.90 billion in inflows over the period, which amounted to $3.266 trillion in assets under management — $58 trillion more than the prior week.

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