US Fed cuts base rate by half-point to 3%
The Fed trimmed its base federal funds rate by a half-point on Wednesday to 3 percent in the face of a global market rout. Shaping India's growth story
By Agencies |
WASHINGTON: The US Federal Reserve trimmed its base federal funds rate by a half-point on Wednesday to 3.0 per cent in its cut reduction in eight days to help an economy that some say is on the brink of recession.
The action came a week after an emergency cut of 0.75 percentage points in the face of a global market rout amid concerns the US economy was headed toward recession.
"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the Federal Open Market Committee (FOMC) said after the vote.
"Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labour markets."
The action came a week after an emergency cut of 0.75 percentage points in the face of a global market rout amid concerns the US economy was headed toward recession.
"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the Federal Open Market Committee (FOMC) said after the vote.
"Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labour markets."
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The panel headed by Fed chairman Ben Bernanke voted 9-1 in favour of the move, with Dallas Fed chief Richard Fisher favouring no change.
"Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity," the Fed's statement said.
"However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks."
The cuts in the federal funds rate, used for overnight interbank loans, can help lower a wide range of borrowing costs for consumers and businesses, and as such can help spur activity in an economy buffeted by the worst housing slump in decades which has spilled over to the financial sector.
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