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Fed slashes interest rates due to recession fears

October 30, 2008 by  

The Fed slashed in the interest rate to 1%The slowing economy and concerns about the availability of credit were at the heart of the Federal Open Market Committee’s unanimous decision to cut the federal funds rate by half of a percentage point on Wednesday.

Following the action, the key lending interest rate has been set at 1 percent. It is the second reduction seen this month, after a similar half-point cut was made on October 8th.

"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 Fed wrote in a statement.

The committee also promised to "monitor economic and financial developments carefully" with regard to future decisions.

Analysts are divided on whether the Fed is likely to reduce rates even further.

California State University economist Sung Won Sohn told the Associated Press that he thinks the committee will make the "momentous decision" to slash the funds rate to zero if such an action is warranted by global events.

The federal funds rate reflects the interest rate at which banks lend immediately available funds to other banks overnight.

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  • Bob Livingston

    More delays… The system needs a massive cleansing.  There are many institutions that NEED to go broke.  By pumping up the money supply, dropping interest rates and passing bailouts for crooks… they are just prolonging the agony for America.  Things won’t turn around until they allow the ones to fail that deserve to.  Bob.

  • Marie

    Bail outs must have conditions and restrictiions, or else it will be used for something other than what it was intended for.  Congress must answer why they did not do anything when Pres. Bush in 2003 and McCain in 2005 alerted them on Freddie Mac and Fannie Mae’s questionable operations.  Afterall these two are the main cause of the sub-prime crisis according to some analysts. Why can’t the media tell us the truth?  Some of the things they say are false and they are never in trouble, that is why we have a lot of misinformed people who are blaming everything on Pres. Bush.  Don’t they know that Congress is in charge of our domestic policies? The Democrats are the majority in that. Can our public school system teach our kids how our government operates? Most high school graduates don’t have any idea. Sooo sad.


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