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| Version 0 | Version 1 |
|---|---|
| Further cut in US interest rates | Further cut in US interest rates |
| (20 minutes later) | |
| The Federal Reserve has cut its key interest rate from 2.25% to 2.0% as it aims to avoid a possible US recession. | The Federal Reserve has cut its key interest rate from 2.25% to 2.0% as it aims to avoid a possible US recession. |
| It is the latest in a series of rate cuts, which began in September when the federal funds rate was cut from 5.25% to 4.75%. | It is the latest in a series of rate cuts, which began in September when the federal funds rate was cut from 5.25% to 4.75%. |
| But the statement from the Federal Reserve did not contain a strong indication that this would be the last cut that many analysts were expecting. | |
| New York shares rose sharply, moments after the decision was announced. | New York shares rose sharply, moments after the decision was announced. |
| The US economy has been hit by a downturn in the housing market and some analysts believe it is already in a recession. The Fed was somewhat more dovish this time and they can easily go both ways from here Michael Woolfolk, Bank of New York Mellon | |
| "Recent information indicates that economic activity remains weak," the Federal Reserve's rate-setting committee said in a statement. | "Recent information indicates that economic activity remains weak," the Federal Reserve's rate-setting committee said in a statement. |
| "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters." | "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters." |
| 'Downside risks' | |
| But the statement did contain subtle indications that there may not be many more cuts to come. | |
| In the statement announcing March's rate cut, the committee said that the action taken so far should help to promote growth, but warned that, "downside risks to growth remain". | |
| The latest statement did not contain such a warning. | |
| "The Fed was somewhat more dovish this time and they can easily go both ways from here," said Michael Woolfolk, at Bank of New York Mellon. | |
| "People were expecting a clear sign that the next move would be a pause, but the statement doesn't make that clear." | |
| The cut came despite figures showing the US economy had grown faster than expected in the first three months of 2008. |