The Federal Open Market Committee (FOMC) has voted to lower its target for the federal funds rate 50 basis points to 1%.
According to the FOMC, the pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.
The rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures and official steps to strengthen financial systems should help over time to improve credit conditions and promote a return to moderate economic growth, the FOMC adds.
Source: Federal Open Market Committee