US Fed cuts key interest rate
The Federal Reserve of US on Wednesday reducing the federal funds rate by a half point & cut a key interest rate for the second time in just over a week. It signalled that further rate cuts were possible. The half-point cut Wednesday followed news that the economy had slowed significantly in the final three months of last year with the Gross Domestic Product expanding at a barely discernible pace of 0.6%, less than half what had been expected. The amid increased concern from several quarters about a possible recession. “Financial markets remain under considerable stress.” in a brief statement explaining their decision by Federal Reserve Chairman Ben Bernanke. The Fed move was approved on a 9 to 1 vote. Richard Fisher, President of the Fed`s Dallas regional bank, dissented, preferring no change in rates. The rate cut marked the fifth time that the Fed has cut the funds rate since it started with a half-point cut on Sept 18 in response to the severe credit crisis which hit global markets in August. The Fed`s half-point move met expectations of financial markets and was a bolder move than the smaller quarter-point cut that many economists had been expecting.
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