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Economy in Brief

FOMC Cut Funds Rate to 1.00%; The Lowest Since 2004
by Tom Moeller October 29, 2008

The Federal Open Market Committee today cut the Federal funds rate, as expected, to 1.00% from 1.50%. The discount rate also was cut to 1.25%. The latest Fed funds rate was its lowest since 2004.

The Fed indicated three specific reasons for lowering interest rates today. 1) A slowdown in U.S. economic growth due to slower consumer spending and weaker business investment spending 2) Financial market turmoil and 3) an expectation for moderation in inflation due to lower energy and other commodity prices as well as slower economic growth.

Credit market conditions were expected by the Fed to improve due to interest rate cuts around the world, "extraordinary liquidity measures" and actions to strengthen financial systems.

The decision was unanimous amongst FOMC voters.

For the complete text of the Fed's latest press release please follow this link.

How Economic News Moves Markets from the Federal Reserve Bank of New York can be found here.

  Current Last September 2007 2006 2005
Federal Funds Rate, % (Target) 1.00 1.50 2.00 5.05 4.96 3.19
Discount Rate, % 1.25 1.75 2.25 5.86 5.96 4.19
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