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| Version 0 | Version 1 |
|---|---|
| US rates cut to avoid recession | US rates cut to avoid recession |
| (10 minutes later) | |
| The Federal Reserve has cut interest rates for the second time in nine days as it tries to keep the US economy from entering a recession. | The Federal Reserve has cut interest rates for the second time in nine days as it tries to keep the US economy from entering a recession. |
| The central bank lowered rates to 3% from 3.5% after a two-day meeting. | The central bank lowered rates to 3% from 3.5% after a two-day meeting. |
| Last week, the Fed slashed the cost of borrowing by the largest amount in 25 years in a shock move to calm tumbling global stock markets. | Last week, the Fed slashed the cost of borrowing by the largest amount in 25 years in a shock move to calm tumbling global stock markets. |
| The Fed is hoping the cuts will cushion the US economy from the worst effects of the credit crunch and housing slump. | The Fed is hoping the cuts will cushion the US economy from the worst effects of the credit crunch and housing slump. |
| "Financial markets remain under considerable stress, and credit has tightened further for some businesses and households," the central bank's Federal Open Market Committee said. | |
| "Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labour markets." | |
| Weak growth | |
| Data released earlier showed weak economic growth in the final three months of 2007 as the housing market slump deepened and consumer spending cooled. | Data released earlier showed weak economic growth in the final three months of 2007 as the housing market slump deepened and consumer spending cooled. |
| Growth slowed to an annual rate of 0.6% between October and December, half the rate forecast and compared with a brisk 4.9% growth rate in the previous three months. | Growth slowed to an annual rate of 0.6% between October and December, half the rate forecast and compared with a brisk 4.9% growth rate in the previous three months. |
| Analysts said that the drastic action taken by the Federal Reserve would probably remove the need to cut rates again in the short term. | |
| "The language in the statement was fairly strong, suggesting the Fed is still worried with the possibility of further deterioration in the US economy," said Mark Meadows, a market analyst at Tempus Consulting. | |
| "This move, combined with last week's cut, should be enough for them to address some of these worries and they are probably done for now." | |
| Many economists are forecasting the US economy will enter a recession this year as turmoil in housing and financial markets begins to hurt ordinary households. | Many economists are forecasting the US economy will enter a recession this year as turmoil in housing and financial markets begins to hurt ordinary households. |
| A $146bn (£73bn) economic stimulus package has been proposed by President George W Bush in an attempt to ward off a recession. | A $146bn (£73bn) economic stimulus package has been proposed by President George W Bush in an attempt to ward off a recession. |
| The measures include rebates for people with lower incomes as well as tax incentives for businesses. | The measures include rebates for people with lower incomes as well as tax incentives for businesses. |