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Fed cuts key lending rate to 1%

Text by AFP

Latest update : 2008-10-29

The US Federal Reserve cut a key interest rate by a hefty half-percentage point in a fresh bid to prevent the ongoing credit crisis from tipping the United States into a deep and prolonged recession.

The US Federal Reserve cuts its key lending rate half a point Wednesday to 1.0 percent in the latest move to ease a credit crisis that is strangling the US economy.
   
The cut in the federal funds rate followed an emergency half-point cut earlier this month coordinated with other central banks to help ease a worldwide credit crunch.
   
"The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures," said the Federal Open Market Committee headed by Ben Bernanke after the unanimous decision.
   
"Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for US exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit."
   
The statement said the range of actions by the Fed and other banks to help get credit flowing "should help over time to improve credit conditions and promote a return to moderate economic growth."

Date created : 2008-10-29

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