With new cut, Fed takes aggressive move to head off downturn

0 Comments | AFP, January, 2008

WASHINGTON (AFP) — The US Federal Reserve slashed its base federal funds rate a half-point Wednesday to 3.0 percent in its second cut in eight days to help an economy that some say is on the brink of recession.

The action extends an aggressive effort to ease borrowing costs and comes a week after an emergency cut of 0.75 percentage points in the face of a global market rout and concerns the US economy was sinking fast.

"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the Federal Open Market Committee (FOMC) said after the vote.

"Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets."

The panel, headed by Fed...