NewsFlashUS Fed lowers key rate by quarter-pt
30 April 2008 19:34 [Source: ICIS news]
HOUSTON (ICIS news)--The US Federal Reserve (Fed) lowered the key federal-funds rate on Wednesday by a quarter point to help spur economic growth.
The move came amid concerns by some economists that continued rate cuts could spark inflation.
The drop will bring the rate to 2%.
The Federal Reserve said in a statement that economic activity remains weak."Household and business spending has been subdued and labour markets have softened further," it said.
As in its statement on 18 March, the Fed said, "Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."
The Fed said it expects inflation to moderate in the upcoming quarters as prices energy and other commodities level off.
The Fed said its previous rate cuts and other steps to increase market liquidity should promote moderate economic growth and address risks to economic activity.
The lower rate comes as the US GDP grew by 0.6% in the first quarter. At the same time, crude oil is still trading well above $100/bbl, despite recent drops.By: Al Greenwood
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