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Fed Cuts Rate Half-Point to 1%

1% is lowest mark since 2004 as Bernanke tries to combat slowdown

By Kevin Spak, Newser Staff

Posted Oct 29, 2008 1:29 PM CDT

(Newser) – The Federal Reserve surprised no one today, cutting interest rates by half a point, to 1%—as investors widely predicted he would, AP reports. “The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures,” the Fed said in a statement, with the financial crisis “likely to exert additional restraint on spending.”

Though the move takes the target rate to 1%, its lowest since 2004, some say the effect may be slight, because the Fed is now paying banks interest on excess reserves deposited at the Fed. “The Fed funds rate is almost irrelevant,” said one economist. “The easing has already taken place.” Another economist disagreed. “As long as there are benefits,” he argued, “they’ve got to keep trying.”

Federal Reserve Chairman Ben Bernanke speaks at the Economic Club of New York, Oct. 15, 2008. (AP Photo)

Federal Reserve Chairman Ben Bernanke testifies on Capitol Hill last week. (AP Photo)

Federal Reserve Chairman Ben Bernanke smiles after giving a speech at the Economic Club of New York, Oct. 15, 2008. (AP Photo)

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Fed Cuts Rate Half-Point to 1%

1% is lowest mark since 2004 as Bernanke tries to combat slowdown

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Fed Cuts Rate to 0%-0.25%

Target is record low as Reserve battles recession

Record Low Rates Leave Investors Cold

Cut is likely tomorrow, but Wall Street wants more varied approach

'Race to Zero' Under Way as Central Banks Cut Rates

With Fed at 1% and European, Asian banks trimming, no-interest loans not far off, perhaps

Think 1% Is Low? He Could Go to Zero

Analysts predict Japan-style cuts in interest rates

Poor Day Ends Horrible Week

Dow off 312, but bears show some restraint

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Fed Cuts Rate Half-Point to 1%

1% is lowest mark since 2004 as Bernanke tries to combat slowdown

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OTHER STORIES ON OUR RADAR

Ben Bernanke • Federal Reserve • federal funds rate • interest rate cut • financial crisis

MOST POPULAR STORIES

[ By Views ]

[ By Comments ]

More Newser Stories

Fed Cuts Rate to 0%-0.25%

Target is record low as Reserve battles recession

Record Low Rates Leave Investors Cold

Cut is likely tomorrow, but Wall Street wants more varied approach

'Race to Zero' Under Way as Central Banks Cut Rates

With Fed at 1% and European, Asian banks trimming, no-interest loans not far off, perhaps

Think 1% Is Low? He Could Go to Zero

Analysts predict Japan-style cuts in interest rates

Poor Day Ends Horrible Week

Dow off 312, but bears show some restraint

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Newser By Users

Community

Site Maps

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More News

What is Newser?