U.S. Federal Reserve makes Emergency 75 basis point cut.

January 22, 2008 - Forex Economic News

The U.S. Federal Open Market Committee cut its interest rate by 75 basis points from 4.25 percent to 3.5 percent in an emergency move today. The Fed Committee made its move a day after global stock markets took a beating on sentiment that the United States may not be able to head off a recession and following a slew of weak fundamental data releases that have come out of the US in recent weeks. The Fed, citing "a weakening of the economic outlook and increasing downside risks to growth", cut interest rates in an emergency move for the first time since September of 2001. The Fed stated that "broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets." The Fed believes that inflation will "moderate in coming quarters" but that "appreciable downside risks to growth remain." The Fed statement said that it will monitor the situation and act if needed as the FOMC has its scheduled meeting at the end of January to ponder whether more rate cuts will be necessary.

Tags: Interest Rates, US Economy, US Federal Reserve------------------- Blog index