(updating with comments from Fed)
WASHINGTON (AFX) - The Federal Open Market Committee cut its key fed
interest rate to 4.5 pct from 5.0 pct.
In a related move, the Federal Reserve Board lowered its largely
discount rate to 4.0 pct from 4.5 pct.
This is the fourth reduction in the federal funds rate since the
of the year, and the second time the FOMC has announced an inter-meeting
cut. The FOMC began the current easing cycle with a surprise 50 basis point
cut on Jan 3.
The FOMC rate cut was unexpected. Most Wall Street analysts had expected
FOMC to wait until the scheduled May 15 meeting to cut the federal funds
50 basis points.
Looking forward, the FOMC said that the risks continue to be tilted
economic weakness/are neutral with respect to economic weakness and
The FOMC decided in a conference call at 8.30 am this morning to go
with the rate cut decision, according to a Fed spokesman.
The Federal Reserve Board voted unanimously to cut the discount rate,
In a statement, the FOMC said that "capital investment has continued to
soften, and the persistent erosion in current and expected profitability, in
combination with rising uncertainty about the business outlook seems poised
dampen capital spending going forward."
The FOMC concluded that this "potential restraint," along with the
negative impact of asset price declines on consumption, "and the risk of
growth abroad, threatens to keep the pace of economic activity unacceptably
"As a consequence, the (FOMC) agreed that an adjustment in the stance of
policy is warranted during this extended intermeeting period," the FOMC
The Fed funds rate is now at its lowest level since May 1994.
The FOMC will meet again on May 15.
For more information and to contact AFX: www.afxnews.com and
This archive was generated by hypermail 2b29 : Sun Apr 29 2001 - 20:25:54 PDT