Spirits, markets get a lift

0 Comments | USA TODAY, September, 2007 | by Sue Kirchhoff, John Waggoner and Barbara Hagenbaugh

WASHINGTON -- The Federal Reserve's unanimous decision to slash a key interest rate Tuesday is a dramatic statement that the central bank will do whatever it takes to prevent turmoil in the financial markets and a steep downturn in the housing sector from pulling the country into recession.

By cutting rates so sharply, the Fed indicated it hopes to put a floor under the plunging housing market, steady business hiring and investment and keep the economy growing as it has for the past six years. A less tangible, but equally important, goal is to restore confidence in the financial markets. Investors got at least a short-term boost after the Fed's announcement, as the stock market posted its biggest one-day point rally since 2002.

Rate cuts take months to fully...