Fed cuts key rate by 0.25 percentage points

Business Materials 30 April 2008 23:49 (UTC +04:00)

The Federal Reserve cut its benchmark interest rate by 0.25 percentage points on Wednesday to 2 per cent, its lowest level since November 2004, amid continuing concerns of an economic downturn in the United States, the dpa reported.

The central bank's decision came after the government reported US growth at an annual rate of 0.6 per cent in the first quarter of 2008, higher than the contraction expected by some economists but still a sign that the world's largest economy has slowed drastically.

"Recent information indicates that economic activity remains weak," the Fed Open Market Committee said in a statement explaining its decision.

The Fed said the "substantial" cuts in the federal funds rate should help improve the performance of the economy. The central bank gave no clear indication if this would be its last rate cut, saying it would monitor both growth and "uncertainty" in the outlook for inflation.