Federal Reserve cuts key rate to lowest point in three years

NEW YORK -- The Federal Reserve on Tuesday continued its determined efforts to ward off a recession or worse by slashing three-quarters of a point off a key interest rate.

The move clearly reflects the Fed’s belief that it needs to do all it can to help alleviate fears that the economy has fallen and can’t get up.

“Fed officials are in full crisis mode and are striving to prevent a collapse,” said Maury N. Harris, chief economist at UBS.

The 75 basis point cut will translate immediately into lower rates for consumers and businesses as banks cut their prime lending rate by a similar amount.

“We’re in the middle of the worst part of the recession,” said John Silvia, chief economist for Wachovia.

The federal funds rate, the interest that banks charge each other on overnight loans, now stands at 2.25 percent, down from 4.25 percent at the beginning of the year.

SOURCE:  Fox Business News