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WASHINGTON — The Federal Open Market Committee slashed the federal funds rate by 75 basis points on Jan. 22 well ahead of its scheduled meeting at month’s end, making good on Chairman Ben Bernanke’s promise to take swift action to defend against recession. Taking the funds rate to 3.5% is a “huge decrease,” said NAFCU’s chief economist Dr. Tun E. Wai. The Fed’s Board of Governors also decreased the discount rate by 75 basis points to 4%.

The Fed cited the “increasing downside risks to growth” and deterioration in broader financial market conditions coupled with indications of “a deepening of the housing contraction as well as some softening in labor markets,” for the cuts.

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