FED CUTS KEY INTEREST RATE THREE-QUARTERS OF A POINT TO RECORD LOW 0.25 PERCENT IN EFFORT TO THAW FROZEN CREDIT MARKET
Fed cuts key interest rate to record low
Federal Reserve drops key rate to lowest point in history
In what was largely a symbolic move, the Federal Reserve today cut a key short-term interest rate to its lowest level in history. That decision is not expected to have much impact on annual percentage rates for credit cards.
The Fed's rate-setting group, the Federal Open Markets Committee, cut the target for the benchmark federal funds rate to a range of zero to 0.25 percent in the latest in a string of attempts by the regulator to stimulate lending and prop up the faltering economy. At the conclusion of a two-day meeting, committee members voted unanimously on Tuesday to slash the fed funds rate. Previously, the rate's all-time record low was 1 percent, hit most recently in October and before then from June 2003 to June 2004.
Today's action marked the 10th consecutive rate cut. Most recently, the central bank trimmed rates by a half percentage point on Oct. 29. Before the Fed began its campaign of rate reductions in September 2007, the federal funds rate stood at 5.25 percent.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time," the Fed said in a post-meeting statement.