Fed announces 0.5% rate cut and hints a further 05% cut

Fed announced a 0.5% rate cut last night and claimed that it was the fifth cut move. The latest Federal funds rate was 4%, the lowest level for 7 years. The discount rate was lowered from 4% to 3.5%. Fed indicated that it would further reduce the rate by 0.5% in a bid to stimulate the limping US economy.

Fed warned that the US economy would continue the recession and pointed out that the business outlook was obscure since enterprises profits were hurt. Plus, the sluggish stock market and slowing fringe economy would post heavy blow to US economy.

Bank of America Corp and Bank One Corp announced to reduce the prime rate by 0.5% to 7%, which was believed to help boost US economy.

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