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The US Federal Reserve stunned markets today with a massive emergency cut to interest rates, reacting to growing fears of a recession in the world's largest economy.
The US central bank slashed interest rates by 75 basis points to 3.5% ahead of its scheduled meeting next week.
It said it had taken the action in view of a weakening economic outlook and increasing downside risks to growth.
The cut follows steep stock market sell-offs around the world. While some traders had speculated the Fed could react as soon as today, the size of the cut caught markets off-guard.
The dollar weakened against the pound after the move while in London, the FTSE 100, shot into positive territory.
The index was up 76 points, or 1.4%, at 5,653.7 just minutes after the 1.20pm announcement. It had plunged 5.5% yesterday, the biggest fall since 9/11.
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