The U.S. central bank Tuesday cut its key interest rate by a
drastic three-quarters of one percent, in an effort to pull the world's largest
economy out of a deepening recession.
Top officials of the U.S. Federal Reserve pushed the benchmark rate to a record
low (range of between zero and zero-point-two-five percent).
In a note explaining the action, Fed officials said key economic drivers like
consumer spending, business investment and industrial production have all
declined, and the economic outlook has weakened further.
The rate cut is intended to cut borrowing costs and make it easier for
companies to get the money needed to expand and hire new people.
The Fed pledged to employ "all available tools" to restart economic
growth, and said the exceptionally low interest rates may be in place "for
Officials also said they will continue efforts to unfreeze the credit market by
increasing the amount of money in circulation.
U.S. stock markets rallied in anticipation of the rate cut and rose further
after the announcement.
The rate cut follows a continuing series of disappointing economic reports. The
latest shows consumer prices falling by a record amount in the United States in
November, as the recession cut demand.
A separate report said the number of new homes under construction in the United
States fell by a record amount in November, reflecting continued problems with