MARCH 08 W3 ALERTFed Swoops In and Slashes Interest Rates Again
Three-Quarter-of-a-Point Cut Sets Lowest Rate Since 2005
The Federal Reserve Board announced today that it has decided to cut interest rates another three-quarters of a percent taking the rate to two-and-a-quarter percent, it's lowest level since 2005.
Saying that the "outlook for economic activity has weakened further," and that "consumer spending has slowed and labor markets have softened," the Fed again moved to try to stabilize the sharp economic downturn with a move that some deemed not aggressive enough to address what they see as a deteriorating situation. Some economists expected a full point cut as the economy has not responded yet to the previous moves by the Fed.
The Fed in their decision also noted that financial markets "remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters." While also expressing concern about the risk of rising inflation, the Fed seemed to suggest that this risk will minimize over the next few months and that growth remaining the primary concern.
Finally, the Fed sent a strong signal that if the situation does not move towards correction, they "will act in a timely manner as needed to promote sustainable economic growth and price stability."
[Image: Reuters]