The federal Reserve Building in
Washington, September 16, 2008. The Federal Reserve decided Wednesday to
cut a key interest rate by half a percentage point to 1.0 percent to
prevent the economy from slipping into deep recession.(Xinhua/Reuters File
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WASHINGTON,
Oct. 29 (Xinhua) -- The U.S. Federal Reserve decided Wednesday to cut a key
interest rate by half a percentage point to 1.0 percent to prevent the economy
from slipping into deep recession.
The Wednesday's unanimous vote set the rate to the
lowest level since 2004, when the U.S. economy was climbing out of a recession
earlier in the decade. The funds rate has not been lower since 1958, when Dwight
Eisenhower was president.
"The pace of economic activity appears to have slowed
markedly, owing importantly to a decline in consumer expenditures," said the
Federal Reserve in a statement.
"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," it warned.
"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 added.
However, the Federal Reserve said it expects
inflation to moderate in coming quarters to levels consistent with price
stability, "in light of the declines in the prices of energy and other
commodities and the weaker prospects for economic activity."
The Wednesday's cut followed an emergency half-point
cut earlier this month coordinated with other six major central banks to help
cope with the current financial crisis.
Other central banks might also slash the rates to
ease the global credit crisis. China's central bank, the People's Bank of China
(PBOC), cut benchmark interest rates by 0.27 percent earlier Wednesday.
The European Central Bank and the Bank of England are
expected to follow next week.
"Recent policy actions, including today's rate
reduction, coordinated interest rate cuts by central banks, extraordinary
liquidity measures, and official steps to strengthen financial systems, should
help over time to improve credit conditions and promote a return to moderate
economic growth," said the Federal Reserve in the statement.
It also warned that downside risks to growth remain,
hinting that more rate cuts might be possible.
The Fed will monitor economic and financial
developments carefully and "will act as needed to promote sustainable economic
growth and price stability," it noted.
"It's been an amazing U-turn," said Erik Nielsen,
economist with Goldman Sachs in London. "They've realized inflation is no longer
a problem, and now they're out to save the world."
In a related action, the Federal Reserve also
unanimously approved a 50-basis-point decrease in the discount rate to 1.25
percent.
With the U.S. economy still deteriorating, lower
rates and other actions by the Federal Reserve and other U.S. policy makers look
like a strong possibility, according to the U.S. media.
"If the economy weakens further, it may open the door
for another 25 or 50 basis points in December," said John Silvia, chief
economist at Wachovia Corp.
"This Federal Reserve has been extremely aggressive
in terms of providing liquidity," said Frederic Mishkin, a former Fed governor
and now a Columbia University professor.
Should rates go even lower now, they could hit levels
not seen since the 1950s.
However, many economists believe that with rates
already so low, the Fed might decide to hold at 1 percent, leaving some room for
a further reduction if needed next year.
NEW YORK, Oct. 29 (Xinhua) -- Crude oil rallied more than
4 U.S. dollars to above 67 dollars a barrel on Wednesday as a rate cut by the
U.S. central bank outweighed a build-up in crude stockpiles.
Light, sweet crude for December delivery surged to as
high as 68.91 dollars a barrel before retreating to settle at 67.50 dollars a
barrel, trading up 4.77 dollars or more than 7 percent, on the New York
Mercantile Exchange (NYMEX). Full story
NEW YORK, Oct. 29 (Xinhua) -- The dollar fell against
major currencies on Wednesday after the U.S. Federal Reserve decided to cut its
benchmark rate to stimulate the economy.
The Fed decided Wednesday to lower its target for the
federal funds rate 50 basis points to 1 percent, a low last seen in 2003-2004.
The funds rate has not been lower since 1958. Full story
BEIJING, Oct. 29 (Xinhua) -- China's central bank, the
People's Bank of China (PBOC), announced on Wednesday it would cut benchmark
interest rates by 0.27 percent to spur economic growth as of Oct. 30.
The benchmark one-year deposit rate would drop to
3.60 percent from 3.87 percent, while the benchmark one-year lending rate would
fall from 6.93 percent to 6.66 percent. Full story
NEW YORK, Oct. 28 (Xinhua) -- The U.S. consumer confidence
tumbled to an all-time low in October as the stocks plunged and credit crisis
worsened, a research survey report revealed here on Tuesday.
The Conference Board Consumer Confidence Index now
stands at 38.0, down from 61.4 in September. The decline in the index is the
third largest in the history of the series, and the lowest reading on record,
according to the report. Full story
WASHINGTON, Oct. 8 (Xinhua) -- The Federal Reserve,
together with six other major central banks from around the world, slashed
interest rates Wednesday to cope with the current financial crisis.
The U.S. central bank decided to lower its target for
the federal funds rate 50 basis points to 1.5 percent. It also approved a
50-basis-point decrease in the discount rate to 1.75 percent. Full story
