The Federal Reserve cut US interest rates by an aggressive half-percentage point for the third time since the September 11 attacks. The US central bank also signaled its readiness to do more to help an economy widely believed to be in recession.
The Fed lowered its key federal funds rate for overnight bank loans for the tenth time this year to 2% - the lowest level since the Kennedy administration in 1961. The central bank also dropped its more symbolic discount rate by a half-point to 1.5%.
The latest cut comes against an increasingly grim backdrop of rising unemployment and eroding confidence. The third quarter logged the sharpest quarterly contraction in national economic activity since the last recession in 1990-91.
In its statement, the Fed said it still saw weakness, rather than price pressures, as the main threat to the US economy, a sign it was ready to cut rates further should gross domestic product continue to shrink as most private forecasters expect it will into early next year.
