Federal Reserve Cuts Key Rate 0.5 Percent in Attempt to Reverse Worsening Financial Conditions

The Federal Reserve has cut a key interest rate 0.5 percent to 1.5 percent on Wednesday in an attempt to halt a continuing freefall in the financial markets.

Wednesday’s interest rate cut comes nearly three weeks before the Fed has a regulatory meeting scheduled. Moving to cut the rate prior to their meeting was done because of “evidence pointing to a weakening of economic activity and a reduction in inflationary pressures” according to the Fed.

The move was done despite the Fed’s concern that lowering of the key rate could worsen inflation but faced with the prospect of facing further financial deterioration the move was made.

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