The Federal Open Market Committee cut the fed funds target rate by 25 basis points to 2%. This is the lowest the target rate has been since late 2004. The press statement cited weakness throughout the economy and stress in financial markets. It noted higher inflation, but also said that inflation should moderate in the near term. The statement made no reference to upside or downside risks to growth. Two members voted against the rate cut, favoring no action. The Fed also reduced the discount rate 25 basis points to 2.25%.
Prime rates at the major banks have moved down to 5%.
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