FED, WORLD BANKS, LOWER SHORT-TERM INTEREST RATES BY HALF A PERCENTAGE POINT
The Fed, in concert with several world banks today lowered key lending interest rates by half a percentage point in an effort crafted to curb economic damage from the U.S. financial crises that has been spreading across global markets.
The move follows Monday's sharpest declines in several years on Wall Street and Friday's passage of the historic $700 billion Emergency Economic Stabilization Act of 2008.
"Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices," the Fed said in a statement announcing the rate cuts. "The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted."
The Fed's short-term rate now stands at 1.5 percent, and the European Central Bank's rate is 3.75 percent. The joint action to lower the federal funds rates will allow central banks to push for new lending between banks around the world without risk of challenges from banks with relatively higher levels, according to analysts.