The US Federal Reserve has cut interest rates by half a percentage point, the fifth such reduction this year, and signalled that it is ready to do more to reinvigorate the sluggish US economy.
The aggressive move brought the federal funds rate, a benchmark for short-term rates throughout the economy, to 4%, its lowest level in seven years.
The central bank also chopped the discount rate - charged on direct Fed loans to commercial banks - by a half point to 3.5%.
In a statement issued after a meeting of its Federal Open Market Committee, the Fed said it still saw excessive weakness as the main threat to the US economy, implying it was poised to lower rates further if the economy seems in danger of stalling.
It said consumption and housing expenditures had held up reasonably well, but investment in capital equipment had continued to decline. The Fed said the erosion in current and future company profits, and 'considerable uncertainty' about the business outlook, was likely to hold down capital spending.
It said this potential restraint, together with the possible effects of earlier stock market falls on consumption and the risk of slower growth abroad, continued to weigh on the US economy.
