Fed Slashes Key Interest Rate Another Quarter-Point

Board signals further cuts are no sure thing
By Jonas Oransky,  Newser Staff
Posted Oct 31, 2007 1:42 PM CDT
Fed Slashes Key Interest Rate Another Quarter-Point
Traders on the floor of the New York Stock Exchange wait for the Fed interest rate to be announced Wednesday afternoon Oct. 31, 2007. The Federal Reserve, confronted with surging oil prices and a slumping housing market, cut a key interest rate by a quarter-point to 4.5 percent on Wednesday, the second...   (Associated Press)

(Newser) – The Federal Reserve cut its key lending rate today by 25 basis points, to 4.5%. The expected reduction is the second of the federal funds rate in two months. The board asserted, however, that growth and inflation risks are now “roughly balanced,” a signal that further cuts shouldn’t be taken for granted. The discount rate was also cut by a quarter-point, to 5%.

A Fed statement said the cuts “should help forestall” a mortgage-induced meltdown. The Board of Governors was in what the Wall Street Journal calls an “awkward position,” as the economy’s strong third-quarter performance made a cut potentially ominous for inflation concerns. But Fed chairman Ben Bernanke’s real concerns lie in coming quarters; the board voted 9-1 to grease lending wheels. (Read more interest rate stories.)

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