Amid Crisis, Fed Cuts Interest Rates

In an attempt to combat the credit freeze and decreased investment, several major global banking systems, including the Federal Reserve, lowered interest rates today by half a percentage point.

The benchmark rate for the Federal Reserve dipped from 2 percent to 1.5 percent. The European Central Bank, the Bank of England, the Bank of Canada and Riksbank in Sweden also reduced their rates by the same margin. The intent, according to experts, is to let money flow more freely through the banking system, to encourage lending and borrowing, and to increase government spending. Economists at Goldman Sachs and Morgan Stanley predict the Fed could cut rates again by as soon as the end of the month.

The U.S. investment market has continued to slide early this week, in spite of the passage of a $700 billion Wall Street rescue package by Congress last week. Stock indexes are headed for their biggest annual decline since 1937.

Source:
Bloomberg: Fed, ECB, Central Banks Cut Rate in Coordinated Move