WASHINGTON-- Responding to the continuing woes of the world's financial markets, the Federal Reserve today joined with other leading central banks to cut key interest rates.
The Fed's Open Market Committee unanimously approved a one-half point cut in the Fed funds interest rate. In an emergency action in between scheduled meetings, the committee reduced the rate that banks use when lending to each other from 2% to 1.5%.
The Bank of Canada, the Bank of England, the European Central Bank, Sveriges Riksbank (Sweden's central bank) and the Swiss National Bank announced similar actions. The Fed's release noted that the Bank of Japan "expressed its strong support'' of these policy actions but did not elaborate.
"Incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit,'' the committee wrote in explaining its decision.
The Open Market Committee is scheduled to hold its next meeting on Oct. 28 and 29.