This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7202645.stm
The article has changed 20 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| Fed cuts interest rates to 3.5% | Fed cuts interest rates to 3.5% |
| (10 minutes later) | |
| The Federal Reserve has cut interest rates to 3.5%, a shock three-quarters of a percentage point reduction. | The Federal Reserve has cut interest rates to 3.5%, a shock three-quarters of a percentage point reduction. |
| Aiming to reduce the risk of the US falling into recession, the decision comes after sharp stock market declines on Wall Street and around the world. | Aiming to reduce the risk of the US falling into recession, the decision comes after sharp stock market declines on Wall Street and around the world. |
| The Fed said incoming information indicated a deepening of the housing market slump and increased unemployment levels. | The Fed said incoming information indicated a deepening of the housing market slump and increased unemployment levels. |
| One analyst said the Fed was "obviously panicked" by the threat of recession. | One analyst said the Fed was "obviously panicked" by the threat of recession. |
| "Unfortunately they have no power to reverse what in my opinion is the worst post-war recession," said Michael Metz, chief investment strategist at Oppenheimer in New York. | "Unfortunately they have no power to reverse what in my opinion is the worst post-war recession," said Michael Metz, chief investment strategist at Oppenheimer in New York. |
| 'This is huge' | 'This is huge' |
| The Fed's interest move came as a complete surprise, as it was taken outside its timetabled rate-setting Open Market Committee meetings. | The Fed's interest move came as a complete surprise, as it was taken outside its timetabled rate-setting Open Market Committee meetings. |
| It certainly indicates that the Federal Reserve wants to be seen as taken action over the concerns of an economic downturn Jeremy Stretch of Rabobank Markets bounce after rate cutQ&A: Stock market falls | |
| The last two such surprise cuts were on 17 September 2001, shortly after the attacks of 11 September, and on 3 January 2001, in the wake of the dotcom bust. | The last two such surprise cuts were on 17 September 2001, shortly after the attacks of 11 September, and on 3 January 2001, in the wake of the dotcom bust. |
| The last time the Fed cut rates as much as three-quarters of a percentage point was in August 1982, almost 26 years ago. | The last time the Fed cut rates as much as three-quarters of a percentage point was in August 1982, almost 26 years ago. |
| "This is huge," said the BBC's business editor Robert Peston. | "This is huge," said the BBC's business editor Robert Peston. |
| "And it is a big risk. If this doesn't work, then people will say they have nothing left in their locker." | "And it is a big risk. If this doesn't work, then people will say they have nothing left in their locker." |
| Analyst Jeremy Stretch of Rabobank, described the Fed's move as "a sign of panic". | |
| "But it certainly indicates that the Federal Reserve wants to be seen as taken action over the concerns of an economic downturn," he said. | |
| Sub-prime woes | |
| The sharp downturn in the US economy has centred on the slump in the American housing market over the past year. | |
| Against a backdrop of higher US mortgage rates, home loan defaults and repossessions hit record levels last year, specifically in the sub-prime sector. | |
| This industry specialises in higher risk loans to people on low incomes or those with poor credit histories. | |
| As the sub-prime mortgage sector hit crisis point, it triggered record losses at some of America's largest banks. | |
| It also caused the global credit squeeze, as much of this sub-prime debt was repackaged into wider debt offerings that were bought by banks and other investors around the world. | |
| As a result, global banks are now much less willing to lend to each other, or to homes and businesses, until the full extent of the sub-prime exposure is known. |