Fed slashes US interest rates to 3.50 percent

WASHINGTON, Jan 22, 2008 (AFP) – The US Federal Reserve slashed its key federal funds short-term interest rate by three quarters of a percentage point to 3.50 percent Tuesday amid sharp falls on global stock markets.

The Fed announced its move shortly before US stock markets were due to open for trading and amid increasing fears that the world’s largest economy could be sliding into a recession amid a lingering housing market slump.

The Fed has cut rates in prior months, but not as drastically as the cut announced Tuesday by the Washington-based central bank. Following is the text of the Federal Reserve statement on its 75-basis-point rate cut Tuesday:

The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.
The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in