Federal Reserve makes shock rate cut to 3.5 percent

Source: Exec Digital USA

Date :1/22/2008 10:22:21 AM

The Federal Reserve has announced that it has cut a key interest rate by three-fourths of a percentage point to steady the economy as recession fears loom.

The cut, from 4.25 percent, is the largest of its type in recent memory and has been taken “in view of a weakening of the economic outlook and increasing downside risks to growth,” according to the central bank in a short statement today.

Treasury Secretary Henry Paulson [pictured] said Congress and the administration need to agree quickly on a package of tax cuts.

Panic?

"Time is of the essence and the president stands ready to work on a bipartisan basis to enact economic growth legislation as soon as possible," Mr. Paulson said in remarks to the U.S. Chamber of Commerce.

"I continue to have confidence in the underlying strength of the global economy," he continued.

However, the surprise move has failed stop the shares slump, with the Dow Jones stock index falling 2.4 percent in early trading, while Nasdaq dropped three percent.

January 22, 2008