US Federal Reserve stunned financial markets.(Brief Article)

Banker, The, May, 2001

The US Federal Reserve stunned financial markets on April 18 with its fourth cut in interest rates in four months, a surprising 50 basis point cut to 4.5% in the federal funds rate.

The move, in an unscheduled session, was attributed to growing risks of weak capital spending and slowing consumption growth, and led to an initial surge in US and international financial markets.

This cut means US rates have come down by 200bp since the start of the year and, for the first time, have fallen below key rates in Europe (US Federal funds rate vs European Central Bank refinancing rate).