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Fed Rates Lowered by Another Half Percent

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Reacting to an economy that has slid into recession, the Fed lowered interest rates by another 50 basis points (0.50%) to 2%. Stocks climbed on the news. The Fed rates are now at a 40-year low. The move market the first time the rate had slid as low as 2% since 1961.

Here is the verbatim text of the Federal Reserve Open Market Committee's decision on interest rates on Nov. 6, 2001.[/:Author:]
The Federal Open Market Committee decided today to lower its target for the federal funds rate by 50 basis points to 2%. In a related action, the Board of Governors approved a 50-basis-point reduction in the discount rate to 1-1/2%.

Heightened uncertainty and concerns about a deterioration in business conditions both here and abroad are damping economic activity. For the foreseeable future, then, the Committee continues to believe that, against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness.

Although the necessary reallocation of resources to enhance security may restrain advances in productivity for a time, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate.

In taking the discount rate action, the Federal Reserve Board approved the request submitted by the Board of Directors of the Federal Reserve Bank of Richmond.