WASHINGTON (Sept. 17, 2001) — The Federal Reserve cut a key interest rate by one-half point today as it tried to keep the U.S. economy from tumbling into a recession following last week´s terrorist attack on the U.S., the Associated Press reported.
The reduction pushed the federal funds rate — the interest that banks charge each other — to 3 percent, the lowest level in nine years.
It was the eighth rate cut this year, and the AP said economists predicted there would be more to come as the Fed tries to keep the Sept. 11 terrorist attack on New York City's World Trade Center and the Pentagon in Washington, D.C., from pushing the weak U.S. economy into recession.
The Fed action came, according to the Associated Press, after an emergency conference call among Fed policy-makers at 7:30 a.m. EDT, two hours before Wall Street was scheduled to open for the first time since the terrorist attacks.
In a related action, the Fed Board of Governors approved a half-point reduction in the discount rate, which the Fed charges on loans to banks, to 2.5 percent. The Fed last week invited banks to make full use of the discount window if they were facing unusual withdrawal problems because of disruptions following the bombing of the World Trade Center in the heart of New York´s financial district.