Tuesday, December 16, 2008

Recession Economics: Follow-Up - U.S. Federal Reserve Drops Key Interest Rate to Near-Zero; What Next?

Breaking Follow-Up: Recession Street USA

Earlier today we wrote in this piece [ Recession Economics: U.S. Economy Worsens; Will Get Even Worse Before Gets Better] that it was likely the U.S. Federal Reserve would lower its benchmark lending rate sometime today to near zero.

The Fed has now done just that -- the U.S. Federal Reserve chopped its key target interest rate for overnight lending to a record low of about zero.

Beyond its slashing interest rates to just about zero, the Fed's campaign to save the U.S. economy involves an array of new economic measures to stimulate spending. [Read The Fed statement.]

The Fed also announced it would buy even more corporate debt and securities as part of its attempts to cure the financial crisis and economic recession. The stock market appears to like what the Fed is saying and doing as well, rising about 400 points on the news.

"We are going to do whatever we can, use all the tools we have, and do whatever it takes," Fed chairman Ben Bernanke said this afternoon in announcing the record interest rate reduction and further plans to buy up more debt and securities.

Read more at the links below:

Bloomberg: Fed Cuts Rate to as Low as Zero, Will Use All Tools.... Marketwatch.com: US stocks cheer as Fed cuts rates to record low....New York Times.... CNNMoney.com.... Reuters ....Forbes.

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