Last Updated Wed, 06 Nov 2002 14:35:39
WASHINGTON - Interest rates in the United States are on the way down again for the first time since last December. The U.S. Federal Reserve lowered rates by a surprising half-percentage point in the face of ongoing economic uncertainty south of the border.
The federal funds rate ? what banks charge to each other for overnight loans ? now stands at 1.25 per cent.
The Fed's Open Market Committee, which sets interest rates, said "today's additional monetary easing should prove helpful as the economy works its way through this current soft spot."
The Fed also said that greater uncertainty, partly due to heightened geopolitical risks such as potential U.S. military action against Iraq, is holding back spending, production, and employment.
Recent economic data has indicated that the U.S. is seeing rising numbers of people looking for work, a sharp drop in consumer confidence and more signs of contraction in the U.S. manufacturing sector.
The central bank added that inflation and inflation expectations remain "well contained."
Between January and December of 2001, the Fed cut interest rates 11 times, taking them down to 1.75 per cent, levels not seen in 40 years. But through six rate decisions in 2002, the Fed held firm at that level.
Wednesday's half-percentage point cut came as a surprise as markets had been counting on a quarter-percentage point reduction.
WASHINGTON - Interest rates in the United States are on the way down again for the first time since last December. The U.S. Federal Reserve lowered rates by a surprising half-percentage point in the face of ongoing economic uncertainty south of the border.
The federal funds rate ? what banks charge to each other for overnight loans ? now stands at 1.25 per cent.
The Fed's Open Market Committee, which sets interest rates, said "today's additional monetary easing should prove helpful as the economy works its way through this current soft spot."
The Fed also said that greater uncertainty, partly due to heightened geopolitical risks such as potential U.S. military action against Iraq, is holding back spending, production, and employment.
Recent economic data has indicated that the U.S. is seeing rising numbers of people looking for work, a sharp drop in consumer confidence and more signs of contraction in the U.S. manufacturing sector.
The central bank added that inflation and inflation expectations remain "well contained."
Between January and December of 2001, the Fed cut interest rates 11 times, taking them down to 1.75 per cent, levels not seen in 40 years. But through six rate decisions in 2002, the Fed held firm at that level.
Wednesday's half-percentage point cut came as a surprise as markets had been counting on a quarter-percentage point reduction.
