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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (124667)	1/31/2001 2:49:55 PM
From: KLP	Read Replies (1) \| Respond to of 769670

Federal Reserve Cuts Interest Rate The Associated Press Wednesday, Jan. 31, 2001; 2:22 p.m. EST WASHINGTON –– The Federal Reserve, seeking to prevent the faltering economy from slipping into a recession, cut a key interest rate by another half percentage point Wednesday. "Consumer and business confidence has eroded further, exacerbated by rising energy costs that continue to drain consumer purchasing power and press on business profit margins," the Fed said in a statement. The decision came after a two-day, closed-door meeting of the Fed's chief policy-making group, the Federal Open Market Committee. The panel includes Fed Chairman Alan Greenspan, Fed governors and five of the 12 presidents of Federal Reserve banks. The Fed said it was cutting its target for the federal funds rate – the interest banks charge each other on overnight loans – to 5.5 percent from 6 percent. The Fed, in a rare move between regularly scheduled meetings, slashed interest rates by a half-point on Jan. 3, the biggest reduction in more than eight years. Against the backdrop of the weakening economy, the Fed said that "these circumstances called for a rapid and forceful response of monetary policy." The Fed's half-point decrease in the funds rate Wednesday was expected to be quickly followed by announcements from commercial banks that they were reducing their prime lending rate by a similar half point, from 9 percent to 8.50 percent. The prime rate is the key benchmark for millions of loans, from home equity and unpaid credit card balances to short-term loans for small businesses. This marks the first time since Greenspan became Fed chairman in 1987 that the rate has been cut by a full percentage point in a single month. The central bank also reduced its mostly symbolic discount rate, the interest that the Fed charges to make direct loans to banks, by a half point to 5 percent. In the part of the Fed's statement that reflects possible future action, the central bank maintained its stance that its chief concern is the threat of the economy stalling and falling into a recession. "The risks are weighted mainly toward conditions that may generate economic weakness in the foreseeable future," the Fed said.