Fed Cuts Rate by a Quarter Point, to 2%

WASHINGTON -- The Federal Reserve, mixing its concern about the weak economy with worries about the rising cost of energy and food, reduced short-term interest rates Wednesday for the seventh time in seven months, and signaled a likely pause from any additional cuts for now, The New York Times reported.

The Fed’s action, lowering short-term rates to 2 percent from 2.25 percent, followed new indications that the American economy remained fragile, expanding by 0.6 percent on an annualized basis in the first quarter, not an overall downturn that would have indicated a full recession had begun, the paper reported.

Wednesday’s interest rate action was accompanied by a parallel decision to lower the Fed’s discount rate, the rate the Fed charges banks and thrift institutions, from 2.50 percent to 2.25 percent, the paper reported.

-- NYSSCPA.org News Staff

Posted on 4/30/08