CRI听力：US Fed Further Cut Interest Rate

U.S. Federal Reserve cut short-term interest rates on Wednesday for the second time in eight days, meeting widespread expectations by investors on Wall Street for a big rate cut. Tu Yun has the detail.

Reporter:

The central bank lowered its benchmark Federal funds rate, the interest that banks charge each other, by half a point to 3 percent.

It acknowledged that it is now far more worried about an economic slowdown caused by financial-market turmoil and a weak housing market than rising inflation, leaving open the possibility of additional rate reductions.

Wednesday's cut comes on the heels of a surprise three-quarter-point cut at a rare unscheduled meeting on Jan 22.
US Treasury Secretary Henry Paulson commented on the Fed's move.

"I am big believer in what the Fed is doing because I think monetary policy is an effective tool, now it's not the answer to everything. These problems are not going to just disappear because the Fed cuts rates, but we are working through this."

Though the Fed's rate cut was good news for the market, sending stocks higher on Wall Street in the first minutes after the announcement, the market ended in negative territory, dampened by worse-than-expected economic data.

The Commerce Department estimated that the nation's economic growth slowed markedly in the fourth quarter last year to an annual rate of just over half a percent from some 5 percent in the third quarter.

The slowdown was sharper than the already-gloomy forecasts of most economists on Wall Street.

Both the Dow Jones Industrial Average and the Nasdaq Composite Index trimmed a fraction of a percent. And the Standard & Poor's 500, down nearly half a percent.

Earlier in Europe, share markets also fell, following the release of figures showing US home construction fell the most in 26 years and Americans cut back on spending.

London's FTSE 100 index dropped 0.8 percent, Paris’s CAC 40 shed over 1 percent, and Frankfurt's Dax fell a fraction of a percent.

TU Yun, CRI news.