AP
Fed orders emergency rate cut to 1.5 percent
Wednesday October 8, 7:07 am ET
By Jeannine Aversa, AP Economics Writer
Federal Reserve cuts key interest rate by half a percentage point, seeks to revive markets
WASHINGTON (AP) -- The Federal Reserve cut a key interest rate by half a percentage point Wednesday to steady an economy teetering on the kind of financial collapse that America suffered in 1929.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percentage point to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deteriorated, forcing the Fed to reverse course.
The fact that the Fed felt it couldn't wait until its regularly scheduled meeting on Oct. 28-29, underscored the urgency of the situation.
The Fed took the action in a coordinated move with other central banks, which also were cutting their rates.
"The pace of economic activity has slowed markedly in recent months," the Fed said "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."
Although inflation has been high, the Fed believes that the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) -- The Federal Reserve has ordered an emergency interest rate cut of a half a percentage point to cope with the worst financial crisis since the 1929 stock market crash.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percent, to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deterioriated, forcing the Fed to reverse course.
The fact that the Fed felt it could not wait until its regularly scheduled meeting late this month underscored the urgency of the situation.
Fed orders emergency rate cut to 1.5 percent
Wednesday October 8, 7:07 am ET
By Jeannine Aversa, AP Economics Writer
Federal Reserve cuts key interest rate by half a percentage point, seeks to revive markets
WASHINGTON (AP) -- The Federal Reserve cut a key interest rate by half a percentage point Wednesday to steady an economy teetering on the kind of financial collapse that America suffered in 1929.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percentage point to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deteriorated, forcing the Fed to reverse course.
The fact that the Fed felt it couldn't wait until its regularly scheduled meeting on Oct. 28-29, underscored the urgency of the situation.
The Fed took the action in a coordinated move with other central banks, which also were cutting their rates.
"The pace of economic activity has slowed markedly in recent months," the Fed said "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."
Although inflation has been high, the Fed believes that the recent drop in energy prices and the weaker prospects for economic activity have reduced this threat to the economy.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
WASHINGTON (AP) -- The Federal Reserve has ordered an emergency interest rate cut of a half a percentage point to cope with the worst financial crisis since the 1929 stock market crash.
Fed Chairman Ben Bernanke and his colleagues ratcheted down their key rate by 0.5 percent, to 1.5 percent. The action revives the central bank's rate-cutting campaign which had been halted in June out of concerns that those low rates would worsen inflation. Since then, however, economic and financial conditions have dangerously deterioriated, forcing the Fed to reverse course.
The fact that the Fed felt it could not wait until its regularly scheduled meeting late this month underscored the urgency of the situation.
