Fed Cuts Key Interest Rate to Historic Low
The Federal Reserve just announced it is cutting the federal funds to a target range of zero to .25 percent, an unprecedented move as the government scrambles to repair the economy.
The rate at which banks loan to each other is now the lowest U.S. rate on record.
In its policy statement, the Fed said its open market committee, "anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time."
The vote by the committee was unanimous. Wall Street and many economists had been expecting a .5 percent cut.
The Fed's move marks the 10th time it has cut rates in more than a year. But as the Post's Neil Irwin reported this morning: "Rate cuts, however, are not having the same impact that they normally have. Given the meltdown in world credit markets, no matter how low the rate goes, lenders are not passing the cuts to their customers."
The Dow Jones industrial average, which has been up all day, is up 2.5 percent, or more than 200 points, after the news was released.
Ian Shepherdson, chief U.S. economist, for High Frequency Economists, told clients in note that the Fed's move "is a reflection of an utterly desolate economic picture, which will persist for the foreseeable future as the wrenching adjustment in household finances continues."
-- Michael S. Rosenwald
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