WASHINGTON, April 30 (Xinhua) -- The U.S. Federal Reserve decided Wednesday to cut a key interest rate by one quarter percentage point to 2.0 percent to prevent the economy from slipping into recession.

    The Wednesday action, the seventh straight move since Sept. 18,2007, could be the last one for a while as soaring energy and food prices heighten inflation concerns, according to analysts.

Traders in the Eurodollar options pit of the Chicago Mercantile Exchange in Chicago, Illinois signal orders shortly after the Federal Open Market Committee lowered short-term interest rates March 18, 2008. The U.S. Federal Reserve decided Wednesday to cut a key interest rate by one quarter percentage point to 2.0 percent to prevent the economy from slipping into recession.  (Xinhua/Reuters Photo) Photo Gallery>>>

    As a result of the Fed actions in the past seven months, the federal funds rate, which commercial banks charge each other on overnight loans, have been cut by a combined 3.25 percentage points.

    The quarter-point rate cut would trigger a similar reduction in banks' prime lending rate, the benchmark for millions of consumer and business loans. That means borrowing costs for consumers and businesses would be lowered to 5 percent from 5.25 percent.

    The Fed action came hours after a government report showed that the U.S. economy grew at an annual rate of 0.6 percent in the first three months of this year, the same pace as in the previous quarter but slightly stronger than the 0.2 percent growth rate forecast by analysts.

    The growth paces in the past two quarter were far below the brisk 4.9 percent registered in the third quarter of last year. A growing number of economists believe the economy is in a recession and is indeed contracting now.

A customer pumps gas at a Shell gas station in Cambridge, Massachusetts April 29, 2008. (Xinhua/Reuters Photo) Photo Gallery>>>

    On the other hand, however, inflationary pressures are rising.

    The government report also showed that core prices, which exclude volatile energy and food, rose at a rate of 2.2 percent in the first quarter. That was outside the Fed's comfort zone of one percent to 2 percent.

    Analysts say that the Fed is walking a tightrope. It is trying to shore up economic growth and at the same time it is mindful that it can not let inflation get out of hand.

    In a brief statement announcing the rate cut, the Fed said Wednesday that recent information indicates that "economic activity remains weak."

    Household and business spending has been subdued and labor markets have softened further, it said. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.

    While saying the central bank expected inflation to moderate incoming months, the Fed noted that "uncertainty about the inflation outlook remains high."

    "It will be necessary to continue to monitor inflation developments carefully," it said.

    The Fed also expressed its hope that interest rate cuts to date, combined with other measures to foster market liquidity, can "help to promote moderate growth over time and to mitigate risks to economic activity."

    It will continue to monitor economic and financial developments and will "act as needed" to promote sustainable economic growth and price stability, the Fed said.

    In a related action, the Fed unanimously approved a quarter percentage point reduction in the discount rate, the interest rate that the central bank charges to make direct loans to banks, to 2.25 percent.

Crude declines after inventories data, rate cut

    NEW YORK, April 30 (Xinhua) -- Crude oil futures fell Wednesday after U.S. government data showed U.S. crude inventories rose more than expected last week and the interest cut by the U.S. Federal Reserve.

    Crude for June delivery closed down 2.17 U.S. dollars, or 1.9 percent, at 113.46 dollars a barrel on the New York Mercantile Exchange. Full story

Dollar falls after Fed rate cut

    NEW YORK, April 30 (Xinhua) -- The dollar fell against major currencies on Wednesday after the U.S. Federal Reserve cut interest rates by a quarter percentage point as expected.

    The Fed action, after a two-day meeting, pushed the federal funds rate down to 2 percent, the lowest level since late 2004. It marked the seventh rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession. Full story

Buffett: U.S. recession to be longer, deeper

    BEIJING, April 29 (Xinhuanet) -- The world's richest person said Monday the U.S. economy is in a recession that will be more severe than most people expect.

    Warren Buffett made his prediction on CNBC television after his Berkshire Hathaway Inc. agreed to invest 6.5 billion U.S. dollars in the takeover of chewing gum maker Wm. Wrigley Jr. Co. by Mars Inc. in a 23 billion dollar transaction. Full story

IMF: U.S. economy to tip into "mild recession"

    WASHINGTON, April 9 (Xinhua) -- U.S. economy will slide into "a mild recession" in 2008 in the face of a major financial crisis as the global economy is losing speed, according to the World Economic Outlook released by the International Monetary Fund on Wednesday.

    "The U.S. economy will tip into a mild recession in 2008 as the result of mutually reinforcing cycles in the housing and financial markets, before starting a modest recovery in 2009 as balance sheet problems in financial institutions are slowly resolved," said the report. Full story