In emergency move, Fed cuts interest rates by 0.5%
By David Brancaccio
The Federal Reserve this morning cut interest rates by half a percentage point. For this to happen between formal policy meetings is highly unusual and an indication of the emergency driving the decision. What’s called the “federal funds rate,” the main way central bankers add or remove liquidity into the financial system, was already low, and now it will be managed to stay between just 1% and 1.25%.
To make sense of the cut, we spoke with Karen Petrou, managing partner of the Washington-based economic consulting firm Federal Financial Analytics.
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