Fed cuts rate for 2nd time in 8 days

WASHINGTON (AP) — The U.S. Federal Reserve on Wednesday cut a key interest rate for the second time in just over a week, reducing the federal funds rate by a half point. It signaled that further rate cuts were possible.

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Ben Bernanke, chair of the Federal Reserve, which Wednesday cut its key rate for the second time in 8 days.

The Fed action Wednesday pushed the funds rate to 3 percent. It followed a three-fourths of a percentage point cut on January 22, a day after financial markets around the world had plummeted on fears that the U.S. economy was heading into a recession.

That decrease had been the biggest one-day move in more than two decades.

The cut was expected to be quickly followed by cuts in banks’ prime lending rate, the benchmark rate for millions of consumer and business loans.

The Fed’s hope is that by making credit cheaper, it will encourage more borrowing, giving the economy a needed boost.

The half-point cut Wednesday followed news that the economy had slowed significantly in the final three months of last year with the gross domestic product expanding at a barely discernible pace of 0.6 percent, less than half what had been expected.

The report came amid increased concern from several quarters about a possible recession.

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