NEW YORK (Oct. 2, 2001) —The Federal Reserve today slashed short-term interest rates a half-percentage point—the ninth such cut this year—reducing such rates to their lowest level since 1962. The Fed said it was poised to lower borrowing costs further if necessary to avert a recession in the wake of the Sept. 11 terrorist attacks.
In its statement accompanying the move, the Fed said the attacks have “significantly heightened uncertainty in an economy that was already weak."
The Fed said business and household spending, as a consequence, are being further damped. "Nonetheless, the long-term prospects for productivity growth and the economy remain favorable and should become evident once the unusual forces restraining demand abate," the Fed said.