Federal Reserve cuts interest rate for second time

The US Federal Reserve cut interest rates to just 3 per cent, in the hope of keeping the US Economy from falling into recession.

Economies around the world have speculated and hoped that the US Federal Reserve would once again slash its benchmark lending rate. Today, it did as requested, lowering the rate by 0.5 percentage points, to just 3 per cent.

In a statement released by the Federal Reserve On Wednesday, the Federal Reserve stated, "Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets."

The Fed continued in their statement, "Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks of economic activity. However, downside risks to growth remain."

In the press release, the Fed indicated coyly that if necessary, it will continue to cut the interest rate in the hopes of strengthening the economy and pulling the country back towards growth.

This news was much expected by many economists. Many believe that, with the US $146 billion stimulus package, which includes rebate checks to American taxpayers and cuts to businesses, will help to pull the country back in line with economic growth. The stimulus package passed the House Tuesday and is currently in the Senate awaiting approval.