(1888PressRelease)
November 08, 2008 - London - The rate cut is the second in the month of the October. Earlier this month, the Fed cut benchmark interest rates from 2 percent to 1.5 percent in an emergency move coordinated with five other central banks. The rate cut to 1 percent brings it to the lowest level since June 2004, when the government cut rates to promote economic growth in the aftermath of the Internet bubble burst.
The Fed hopes that the move will help thaw frozen credit markets and "should help over time to improve credit conditions and promote a return to moderate economic growth".
The Central bank acknowledged that the economy had slowed considerably “owing importantly to a decline in consumer expenditures.”
All indicators of economic growth indicated a slow down. "Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for US exports,” the Central bank stated.
However the rate cut failed to boost US markets with the Dow and S&P 500 closing in the negative.
The slash in interest rates by the Fed follows a similar action by the central banks of Norway and China on Wednesday. China's central bank has cut the country's interest rate by 0.27% in an attempt to stimulate economic growth.
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