Fed Drops Key Rate to 1 Percent

The Federal Reserve trimmed a half point off the key federal funds interest rate Wednesday, dropping it to 1 percent.

In a statement, the Fed acknowledged that the economy has few bright spots. “The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures,” the central bank said.

It left open the possibility of further cuts, saying it would “act as needed” to stabilize prices and encourage growth.

Unemployment has risen to 6.1 percent from 5 percent in January as a result of the loss of 700,000 jobs. Analysts say this news is particularly alarming since job losses usually come early in a recession.

Source: The New York Times, Edmund L. Andrews (10/29/08)