US interest rates cut by 0.75%
US interest rates were slashed by three-quarters of a percentage point today as the American authorities responded to growing fears the economy was heading into a steep and prolonged downturn.
The US Federal Reserve said it was reducing its key federal funds rate to 3.5 per cent "in view of a weakening of the economic outlook and increasing downside risks to growth."
The emergency cut, the biggest single reduction for 26 years, came an hour before Wall Street was due to open for the first time in three days - during which share prices in the rest of the world have plummeted - and a week before the normally scheduled six-weekly meeting of the Fed's interest rate setting meeting.
In its accompanying statement the Fed referred to the deterioration in financial market conditions, a deepening of the housing market contraction and a softening in the jobs market. It expected inflation to moderate in the coming months.
The Fed has moved swiftly since the credit crunch to loosen monetary policy, cutting three times from 5.25 per cent even today's announcement.
The cut was not unanimous: one member of the Fed's open market committee, William Poole, voted against.
No comments:
Post a Comment