Fed Cuts Key Interest Rate ¾ Point

The Federal Reserve today cut the federal funds rate by ¾ of a percentage point, from 3% to 2.25%, disappointing many investors who were hoping for a cut of a full point, reports the Wall Street Journal. The Fed voted 8-2 for the rate cut. "Recent information indicates that the outlook for economic activity has weakened further," the central bank said in a statement, adding it will take further action when needed.

On the plus side, the Fed also said it "expects inflation to moderate ... reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization." But the size of the cut might also show that the Fed is nervous about the dollar's plunge. (More Federal Reserve stories.)