Fed Cuts Key Interest Rate by Half a Point
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
The Federal Reserve Bank has cut its federal funds rate by half a point to 4.75 from 5.25 in its most aggressive move in five years.
The cut is aimed at preventing the American economy from heading into recession as it suffers from credit pains related to the mortgage crisis. The Fed rate affects consumers because it would likely mean that the prime lending rate, which is now at 8.25%, could fall by the same amount. A lower rate would increase loans and spending, pulling the economy up.
Wall Street welcomed the large cut. The Dow Jones Industrial Average rose 204.20 to 13607.62. The S&P 500 added 27.64 to 1504.29, and the Nasdaq Composite Index increased 43.33 to 2624.99.
“More than anything it will boost confidence,” a senior economist with Moody’s Economy.com, Marisa DiNatale, said. “It sends a clear signal to investors that the Fed is engaged and ready to act.”
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