Don't miss

Replay


LATEST SHOWS

THE DEBATE

Macron in Washington: Can he change Trump's Foreign Policy?

Read more

FOCUS

Catalonia's pro-independence movement tempted by radicalisation

Read more

ENCORE!

Film show: 'May ’68', Director’s Fortnight reloaded, 'A Paris Education'

Read more

IN THE PRESS

Macron and Trump: Dandruff diplomacy?

Read more

PERSPECTIVE

Big data: ‘A key democratic issue’

Read more

MIDDLE EAST MATTERS

Susan Meiselas: Kurdistan through the lens

Read more

BUSINESS DAILY

Global wine production drops to lowest level in 60 years

Read more

MEDIAWATCH

Trump and Macron media moments in the US

Read more

ENCORE!

Photographer Clare Strand explores the causes and consequences of communication breakdown

Read more

Fed cuts key US interest rate by 0.75%

Latest update : 2008-03-19

The Federal Reserve cut a key U.S. interest rate by three-quarters of a percentage point on Tuesday, as part of an effort to hold off a deep recession and financial meltdown.

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.

Date created : 2008-03-18

COMMENT(S)