Fed Announces New Rate Cut

Washington, D.C.–The Federal Reserve cut the Fed funds rate by 74 basis points Tuesday to 2.25 percent, the Financial Times reports.Internationally, stock markets rose Tuesday due to the cut and to better-than-expected earnings from two investment banks, Goldman Sachs and Lehman Brothers.A full percentage point cut had been expected by many economists; however, two members of the Federal Open Market Committee wanted a less aggressive move, according to the Times.The Fed is adopting a dual approach to policy, with non-rate measures created to open up credit channels and let the Fed rate cuts fully take effect, said Drew Matus, senior economist at Lehman Brothers.