Sept. 18 (Bloomberg) -- The Federal Reserve lowered its benchmark interest rate by a half point to 4.75 percent, the first cut in four years, hoping to keep the U.S. from sinking into a recession sparked by spreading housing-market fallout.
``Developments in financial markets since the Committee's last regular meeting have increased the uncertainty surrounding the economic outlook,'' the Federal Open Market Committee said in a statement after meeting today in Washington. ``The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.''
The larger-than-forecast reduction by Chairman Ben S. Bernanke, facing his biggest test since succeeding Alan Greenspan 19 months ago, suggests that officials see a serious risk of an economic slump. The six-year expansion is threatened by job losses and a worsening housing downturn.
``Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction, and to restrain economic growth more generally,'' the FOMC said.
Today's decision was unanimous. Core inflation has improved ``modestly'' this year, while some risks remain, the Fed said.
``Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time,'' the statement said.
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Sept. 18 (Bloomberg) -- The Federal Reserve lowered its benchmark interest rate by a half point to 4.75 percent, the first cut in four years, hoping to keep the U.S. from sinking into a recession sparked by spreading housing-market fallout.
``Developments in financial markets since the Committee's last regular meeting have increased the uncertainty surrounding the economic outlook,'' the Federal Open Market Committee said in a statement after meeting today in Washington. ``The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.''
The larger-than-forecast reduction by Chairman Ben S. Bernanke, facing his biggest test since succeeding Alan Greenspan 19 months ago, suggests that officials see a serious risk of an economic slump. The six-year expansion is threatened by job losses and a worsening housing downturn.
``Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction, and to restrain economic growth more generally,'' the FOMC said.
Today's decision was unanimous. Core inflation has improved ``modestly'' this year, while some risks remain, the Fed said.
``Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time,'' the statement said.
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