WASHINGTON (Sept. 18, 2007) — The Federal Reserve cut a key interest rate by a half percentage point amid concerns about tightening availability of credit.
The Fed lowered its federal funds rate 50 basis points to 4.75 percent. The rate had held steady at 5.25 percent since June 2006.
“Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally,” the Fed said in a statement. “Today's action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.”
The Fed also cut its discount rate 50 basis points to 5.25 percent.