U.S. Fed cuts Interest Rate by 75 basis points to 2.25%.

March 18, 2008 - Forex Economic News

Today, the U.S. Federal Open Market Committee concluded its meeting by cutting its benchmark interest rate by 75 basis points. The 75 point rate cut follows a 50 point cut on January 30th and it is the sixth rate deduction since September. Today's cut brings the interest rate down to 2.25 percent, a level not seen since December of 2004. The rate announcement provided the dollar with a boost against most major currencies as many economists and market participants were expecting a full percentage point rate deduction would take place. The rate decision was not unanimous as Fed Governors Fisher and Plosser dissented and preferred a less "aggressive" decision.

The Fed statement accompanying the rate decision cited the problems affecting the growth of the U.S. economy such as weak consumer spending, credit tightening, a slowdown in the housing market and softening in the labor market. Inflation concerns were also highlighted as the statement said, "Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased." The euro, yen, pound sterling and Swiss franc were all trading lower against the dollar after the news was announced. You can read the Fed statement here.

Tags: interest rate, us fed, fomc, us economy,

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