ID :
27495
Thu, 10/30/2008 - 16:38
Auther :
Shortlink :
https://www.oananews.org//node/27495
The shortlink copeid
Fed slashes key rate cut to 1 percent
WASHINGTON, Oct. 29 (Yonhap) -- The Federal Reserve Wednesday cut a key interest rate by a half percentage point to 1 percent, the lowest in decades, to help boost the faltering markets amid worries of recession affected by the global financial crisis.
The markets' response, however, was mixed, apparently due to the frustrated
anticipation of a further rate cut and the 11 percent market surge the previous
day in the second-biggest gain in decades.
The Dow Jones industrial average shed 74.16 points, or 0.8 percent, while the
tech-heavy Nasdaq finished up 7.74 points, about a half-percent gain.
In announcing the rate cut, the Fed cited the adverse impact of the global
financial crisis on the U.S. economy.
"The pace of economic activity appears to have slowed markedly, owing importantly
to a decline in consumer expenditures," it said. "Business equipment spending and
industrial production have weakened in recent months, and slowing economic
activity in many foreign economies is damping the prospects for U.S. exports.
"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," it said.
The Fed dismissed concerns over a possible inflationary pressure.
"In light of the declines in the prices of energy and other commodities and the
weaker prospects for economic activity, the Committee expects inflation to
moderate in coming quarters to levels consistent with price stability," it said.
The Fed said the series of interest rate cuts by central banks and other
coordinated measures to provide liquidity and strengthen financial systems
"should help over time to improve credit conditions and promote a return to
moderate economic growth."
That referred to the efforts by major advanced and developing economies to
guarantee deposits, provide liquidity and purchase equities of ailing financial
institutions amid the ongoing financial crisis initiated by falling U.S. housing
prices and then by the subprime mortgage crisis spilling over to the overall
economy.
"Nevertheless, downside risks to growth remain," it said. "The Committee will
monitor economic and financial developments carefully and will act as needed to
promote sustainable economic growth and price stability."
The markets' response, however, was mixed, apparently due to the frustrated
anticipation of a further rate cut and the 11 percent market surge the previous
day in the second-biggest gain in decades.
The Dow Jones industrial average shed 74.16 points, or 0.8 percent, while the
tech-heavy Nasdaq finished up 7.74 points, about a half-percent gain.
In announcing the rate cut, the Fed cited the adverse impact of the global
financial crisis on the U.S. economy.
"The pace of economic activity appears to have slowed markedly, owing importantly
to a decline in consumer expenditures," it said. "Business equipment spending and
industrial production have weakened in recent months, and slowing economic
activity in many foreign economies is damping the prospects for U.S. exports.
"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," it said.
The Fed dismissed concerns over a possible inflationary pressure.
"In light of the declines in the prices of energy and other commodities and the
weaker prospects for economic activity, the Committee expects inflation to
moderate in coming quarters to levels consistent with price stability," it said.
The Fed said the series of interest rate cuts by central banks and other
coordinated measures to provide liquidity and strengthen financial systems
"should help over time to improve credit conditions and promote a return to
moderate economic growth."
That referred to the efforts by major advanced and developing economies to
guarantee deposits, provide liquidity and purchase equities of ailing financial
institutions amid the ongoing financial crisis initiated by falling U.S. housing
prices and then by the subprime mortgage crisis spilling over to the overall
economy.
"Nevertheless, downside risks to growth remain," it said. "The Committee will
monitor economic and financial developments carefully and will act as needed to
promote sustainable economic growth and price stability."
