Fed Announces Second January Rate Cut

Washington, D.C.–For the second time in just over a week, the Federal Reserve cut short-term interest rates Wednesday, the New York Times reports. Announcing it was now more concerned about slowing economic growth than inflation, the Fed reduced the benchmark Federal funds rate by half a point to 3 percent at its two-day January policy meeting. In a statement, the central bank said that “financial markets remain under considerable stress, and credit has tightened further for some businesses and households,” adding that recent data implied the housing decline is worsening and the job market is “softening.” On Jan. 22, the Fed held an unscheduled emergency meeting and cut the overnight rate. The January rate cuts–totaling 1.25 percent–are the Fed’s biggest move in years to avoid a recession, according to the Times. Wall Street immediately warmed to the rate cut news. Stocks rose just moments after the announcement; the Dow Jones industrial average was up 100 points Wednesday afternoon.