Fed Cuts Rates By Half-Percentage Point

The Federal Reserve on Tuesday slashed short-term interest rates a half-percentage point, its ninth cut this year, and said it was poised to lower borrowing costs again as it tries to avert the growing threat of a US recession in the aftermath of the September 11 attacks. The policy-setting Federal Open Market Committee cut the federal funds rate governing overnight interbank loans to 2.5 per cent, bringing the rate to its lowest level since 1962 during the Kennedy administration. The discount rate, which applies to emergency Fed loans to banks, was cut a similar amount to 2.0 per cent.