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Fed rate-cut decision unanimous Fed rate-cut decision unanimous
(20 minutes later)
The US Federal Reserve voted unanimously for last month's half point interest rate cut, minutes from the decision making meeting have shown.The US Federal Reserve voted unanimously for last month's half point interest rate cut, minutes from the decision making meeting have shown.
Members voted to cut interest rates from 5.25% to 4.75% last month.Members voted to cut interest rates from 5.25% to 4.75% last month.
The minutes showed policy makers were particularly concerned about the "exceptionally weak" housing sector infecting the whole economy.The minutes showed policy makers were particularly concerned about the "exceptionally weak" housing sector infecting the whole economy.
The members also reduced their forecasts for economic growth in the last three months of 2007 and for 2008.The members also reduced their forecasts for economic growth in the last three months of 2007 and for 2008.
"Given the unusual nature of the current financial shock, participants regarded the outlook for economic activity as characterized by particularly high uncertainty, with risks to growth skewed to the downside," the minutes said. "Given the unusual nature of the current financial shock, participants regarded the outlook for economic activity as characterised by particularly high uncertainty, with risks to growth skewed to the downside," the minutes said.
The US housing market has been in decline with growing numbers of defaults on mortgages.The US housing market has been in decline with growing numbers of defaults on mortgages.
This has been particularly pronounced in the sub-prime sector where borrowers were offered loans they were unable to afford them - especially after low-interest introductory periods expired.This has been particularly pronounced in the sub-prime sector where borrowers were offered loans they were unable to afford them - especially after low-interest introductory periods expired.
By making money cheaper to borrow, the central bank is hoping that people will spend and invest more, revitalising the economy,By making money cheaper to borrow, the central bank is hoping that people will spend and invest more, revitalising the economy,
But the Fed faces a dilemma, with some commentators worried that too-big rate cuts could stoke up inflation.But the Fed faces a dilemma, with some commentators worried that too-big rate cuts could stoke up inflation.