Federal Reserve cuts interest rate

The Federal Reserve cut the
short-term interest rate by a half-percentage point today, expressing
worries
about the damage being done to the economy as a result of the financial
and credit
crises. The rate cut puts the central bank’s federal funds rate at 1
percent. Investors
had been expecting a half-point cut and some were betting that the Fed
would even
cut rates by three-quarters of a point to 0.75 percent. The Dow Jones Industrial fell shortly after the announcement. The fed funds rate is
used to set rates for consumer
loans, including home equity lines and business loans. The lower the
rate, the more the Fed hopes to spur
economic activity.