Fed cuts key interest rate by 3/4 point
|
|
|
| Posted
:
Tue, 18 Mar 2008 18:22:04 GMT |
| By
:
Reuters |
| Category
:
US (Business) |
| News Alerts by
Email ( click
here ) |
|
US Business News |
Home
|
|
|
|
WASHINGTON (Reuters) - The Federal Reserve slashed a key U.S. interest rate by three-quarters of a percentage point on Tuesday, a substantial cut but smaller than many in financial markets had expected, as part of an effort to hold off a deep recession and financial meltdown.The Fed's action takes the bellwether federal funds rate to 2.25 percent, the lowest since February 2005, and comes two days after the central bank announced the latest in a series of emergency measures to stem a fast-spreading global financial crisis. Many in financial markets had expected the Fed to chop the overnight rate by a full point.The Fed has now cut rates by 3 percentage points since mid-September, including 2 points since the start of the year. In recent days, the central bank has also unveiled steps not used since the Great Depression to ensure financial institutions have access to liquid funds.The central bank is pulling out all the stops to provide liquidity to financial markets and put a floor under an economy many analysts believe is in recession.A spike in mortgage delinquencies has escalated since the summer to a full-blown credit crunch that claimed venerable Wall Street institution Bear Stearns as its most prominent victim.The Fed, fearing financial markets would freeze up and send the economy into an sharp downward spiral, has offered cash auctions and direct loans to financial institutions, opening those liquidity avenues beyond the banks that normally deal with the Fed to include other Wall Street firms.In spite of a series of interest rate cuts and liquidity-providing measures, U.S. economic activity has decelerated sharply. Recent reports show a loss in jobs, reduced factory output and a drop in retail sales.The U.S. central bank has set aside lingering concerns on inflation arising from a jump in oil prices, some of which is blamed on the continuing deterioration of the dollar's value.The government has responded to the economy's abrupt slowing with a fiscal stimulus package aimed at putting cash in consumers' wallets. Lawmakers are also pushing for measures that would revive the struggling U.S. housing market by providing relief for homeowners who are delinquent in their mortgages and facing possible foreclosure.U.S. Treasury Secretary Henry Paulson earlier on Tuesday conceded the economy was in decline. "There's no doubt that the American people know that the economy has turned down sharply," he told NBC's Today show.(Reporting by Mark Felsenthal and David Lawder) (c) Reuters 2008. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
|
|
|
|
|
|
Related News
HP sees 'encouraging signs of recovery,' profit climbs 14 per cent San Francisco - The world's biggest computer maker Hewlett Packard said Monday that it saw encouraging signs of recovery as its quarterly earnings rose 14 per cent. The Silicon Valley company said it earned 2.4 billion dollars in the quarter, up fr...
US stocks gain on surprise home sales recovery New York - US stocks surged Monday after the release of some surprisingly buoyant data on home sales. Existing home sales surged to 6.1 million units in October, the highest annualized rate since February 2007 and up 10.1 per cent from September, acc...
Report: Microsoft and News Corp in search pact talks San Francisco - Microsoft and News Corp are in advanced negotiations that would see the media conglomerate's content removed from Google's search index and appear exclusively via Microsoft's Bing search engine, the Financial Times reported Monday. Ne...
US home sales surge to highest level since 2007 Washington - Existing home sales surged more than 10 per cent in the United States in October to their highest level since February 2007, according to figures released Monday. The monthly data by the National Association of Realtors (NAR) beat expect...
US economists: 'Jobless' recovery to reach bottom at start of 2010 Washington - The US economy will start adding jobs some time in the first quarter of 2010, ending a so-called jobless recovery that has plagued the world's largest economy since the summer months, according to a survey released Monday. But the Nati...
Hershey, Nestle, sweeten war for Cadbury Washington - Hershey and Nestle are expected to jump into the war over Cadbury sweets, media reports said Saturday, just weeks after the British-based stalwart rejected a hostile bid by US Kraft Inc. The growing market for chocolate in the developing...
US stock drop slightly on Dell profits, mixed for week New York - Technology and energy shares pushed US stocks lower Friday, capping a mixed week for investors amid unease about the pace of the world's economic recovery. Tech stocks slid after a disappointing earnings report from computer giant Dell, wh...
|
|
|
|
|
|
|
|