Fed Trims Key Interest Rate By ¼ Point

Moving Less Aggressively Than Before, Central Bank Cuts Rate As Economy Continues Slump

(CBS/AP)  The Federal Reserve has cut a key interest rate by a quarter-point, a smaller move than the aggressive easing it undertook earlier this year.

The Fed action, announced Wednesday after a two-day regular meeting, pushed the federal funds rate down to 2 percent, its lowest level since late 2004. It marked the seventh consecutive rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession brought on by a deep housing slump and credit crisis.

The rate cut will mean lower borrowing costs throughout the economy as banks reduce their prime lending rate, the benchmark for millions of consumer and business loans.

The Fed move was in line with expectations. Wall Street believes this could well wrap up the Fed's rate cuts unless the economy threatens to fall into a worse slump than currently expected.

The Fed said it stood ready to "act as needed to promote sustainable economic growth and stability." That phrase was seen as a signal that the Fed is as worried about weak growth as it is about the risk of higher inflation.

The Fed devoted portions of its statement to both the threats of weakness and the threats that inflation could pose, likely reflecting the debate inside the central bank.

There were two dissents from the move, with both Richard Fisher, president of the Dallas regional Fed bank, and Charles Plosser, head of the Philadelphia Fed, arguing that the central bank should make no change in rates.

The central bank is walking a tightrope, trying to jump-start economic growth while also confronting the risk that if it overdoes the credit easing it could make inflation worse down the road.

Many economists believe the country has fallen into a recession. However, the government reported Wednesday that the overall economy, as measured by the gross domestic product, managed to eke out a 0.6 percent growth rate in the January-March quarter, barely in positive territory.

White House press secretary Dana Perino said it's good the economy did not contract and President Bush still believes tax rebates that began this week will give the economy a needed boost, reports CBS News White House correspondent Mark Knoller.

On the overall economy, Fed Chairman Ben Bernanke and his colleagues said in their statement explaining the decision that "economic activity remains weak" with subdued spending by businesses and households.

"Financial markets remain under considerable stress and tight credit conditions and deepening housing contractions are likely to weigh on economic growth over the next few quarters," the Fed officials said.

While saying the central bank expected inflation to moderate in coming months, the Fed statement said that "uncertainty about the inflation outlook remains high," adding that it would be necessary to "continue to monitor inflation developments carefully."

The quarter-point move followed a string of more aggressive rate cuts ranging from a half-point to three-fourths-point in the first three months of this year as the central bank was battling to stabilize financial markets roiled by multibillion-dollar losses caused by rising mortgage defaults.

That turmoil claimed its biggest victim on March 16 when Bear Stearns came to the brink of bankruptcy and the Fed stepped forward with a $30 billion line of credit to facilitate a sale of the nation's fifth largest investment bank to JP Morgan Chase.

However, credit markets, while not back to normal, have stabilized and many analysts believe the worst may be over - although they caution that this forecast could prove too optimistic if the housing slump deepens further, causing even more mortgage defaults than now expected.

Before the Fed made its first rate cut in September, the funds rate had stood at 5.25 percent.

While many economists believe the country is in a recession, the expectation is that it will be a short one ending this summer. If that turns out to be correct, the Fed may hold rates steady for the rest of this year with the next move being a rate increase sometime next year when the economy is on sounder footing.

[forthepeopl1]

AMERICANS NEEDS TO STRIKE........NO ONE WORKING FOR A WEEK OR SO WOULD TELL THE GOVERNMENT ONE THING, THEY CANT DO ANYTHING WITHOUT US AMERICANS WORKING FOR THEM AS SLAVES, SO IF EVERYONE WOULD NOT WORK FOR A COUPLE OF WEEKS, DONT BUY ANYTHING, DO NOTHING FOR A WEEK SEE HOW FAST THE GOVERNMENT STARTS LISTEN TO US.........COME ON AMERICANS WHAT WAITING FOR BUSH/CHENEY TO DECARE A STATE OF EMERGENCY BEFOR YOU WAKE-UP

AND FOR BLACKWATER, ANYONE THATS WANTS TO GET PAID TO KILL AMERICANS SHOULD BE SHOT THEMSELVES, THEY WORK FOR CHENENY AND CHENENY ONLY. WAIT UNTIL THEY USE THEM TOWARD AMERICANS WHEN THEY DECLAIR A STATE OF EMERGANCY JUST BEFORE THEY STRIKE IRAN

[forthepeopl1]

AMERICANS NEEDS TO STRIKE........NO ONE WORKING FOR A WEEK OR SO WOULD TELL THE GOVERNMENT ONE THING, THEY CANT DO ANYTHING WITHOUT US AMERICANS WORKING FOR THEM AS SLAVES, SO IF EVERYONE WOULD NOT WORK FOR A COUPLE OF WEEKS, DONT BUY ANYTHING, DO NOTHING FOR A WEEK SEE HOW FAST THE GOVERNMENT STARTS LISTEN TO US.........COME ON AMERICANS WHAT WAITING FOR BUSH/CHENEY TO DECARE A STATE OF EMERGENCY BEFOR YOU WAKE-UP

AND FOR BLACKWATER, ANYONE THATS WANTS TO GET PAID TO KILL AMERICANS SHOULD BE SHOT THEMSELVES, THEY WORK FOR CHENENY AND CHENENY ONLY. WAIT UNTIL THEY USE THEM TOWARD AMERICANS WHEN THEY DECLAIR A STATE OF EMERGANCY JUST BEFORE THEY STRIKE IRAN

[forthepeopl1]

AMERICANS NEEDS TO STRIKE........NO ONE WORKING FOR A WEEK OR SO WOULD TELL THE GOVERNMENT ONE THING, THEY CANT DO ANYTHING WITHOUT US AMERICANS WORKING FOR THEM AS SLAVES, SO IF EVERYONE WOULD NOT WORK FOR A COUPLE OF WEEKS, DONT BUY ANYTHING, DO NOTHING FOR A WEEK SEE HOW FAST THE GOVERNMENT STARTS LISTEN TO US.........COME ON AMERICANS WHAT WAITING FOR BUSH/CHENEY TO DECARE A STATE OF EMERGENCY BEFOR YOU WAKE-UP

AND FOR BLACKWATER, ANYONE THATS WANTS TO GET PAID TO KILL AMERICANS SHOULD BE SHOT THEMSELVES, THEY WORK FOR CHENENY AND CHENENY ONLY. WAIT UNTIL THEY USE THEM TOWARD AMERICANS WHEN THEY DECLAIR A STATE OF EMERGANCY JUST BEFORE THEY STRIKE IRAN

[forthepeopl1]

AMERICANS NEEDS TO STRIKE........NO ONE WORKING FOR A WEEK OR SO WOULD TELL THE GOVERNMENT ONE THING, THEY CANT DO ANYTHING WITHOUT US AMERICANS WORKING FOR THEM AS SLAVES, SO IF EVERYONE WOULD NOT WORK FOR A COUPLE OF WEEKS, DONT BUY ANYTHING, DO NOTHING FOR A WEEK SEE HOW FAST THE GOVERNMENT STARTS LISTEN TO US.........COME ON AMERICANS WHAT WAITING FOR BUSH/CHENEY TO DECARE A STATE OF EMERGENCY BEFOR YOU WAKE-UP

AND FOR BLACKWATER, ANYONE THATS WANTS TO GET PAID TO KILL AMERICANS SHOULD BE SHOT THEMSELVES, THEY WORK FOR CHENENY AND CHENENY ONLY. WAIT UNTIL THEY USE THEM TOWARD AMERICANS WHEN THEY DECLAIR A STATE OF EMERGANCY JUST BEFORE THEY STRIKE IRAN

[gce65]

A Quarter point is impotent like D1ck Cheney!

CBS: Not covering this? The WaPost is.

Study Finds No Cancer-Marijuana Connection
By Marc Kaufman
Washington Post Staff Writer
Friday, May 26, 2006; Page A03

The largest study of its kind has unexpectedly concluded that smoking marijuana, even regularly and heavily, does not lead to lung cancer.

The new findings "were against our expectations," said Donald Tashkin of the University of California at Los Angeles, a pulmonologist who has studied marijuana for 30 years.

"We hypothesized that there would be a positive association between marijuana use and lung cancer, and that the association would be more positive with heavier use," he said. "What we found instead was no association at all, and even a suggestion of some protective effect."

Federal health and drug enforcement officials have widely used Tashkin''s previous work on marijuana to make the case that the drug is dangerous. Tashkin said that while he still believes marijuana is potentially harmful, its cancer-causing effects appear to be of less concern than previously thought.

Earlier work established that marijuana does contain cancer-causing chemicals as potentially harmful as those in tobacco, he said. However, marijuana also contains the chemical THC, which he said may kill aging cells and keep them from becoming cancerous.

MORE ON WA POST WEBSITE
Read it quick! Before the Bush Admin rewrites the reports with non-scientists and changes its conclusions!

[mcv57]

As I stated before, more dollar devaluation for the poor; and more credit for the Rich.

[noloyalisti]

Again the Fed is doing the bidding of the oil company run fascist US government by driving up oil prices. Lowering the interest rate works like a charm. Also devaluing the dollar might make the rest of the world dump the dollar and call in the debt so that the conservative neo con men can put the final nail in the coffin of the middle class.

[veteran72]

Bernanke showing the face of a man who knows the Neocon Nazis have begun their final solution.
Economic Collapse, World War, 98% Population Reduction

Don''t worry, Ben. You''ve got a place reserved in the Secret Government Underground Bunker, just a few doors down from Rush Limpdickkk.

[lochlan-2009]

Now Congress needs to put a huge (I mean gigantic) tax on the oil companies.

[lochlan-2009]

Now Congress needs to put a huge (I mean gigantic) tax on the oil companies.

[wardoglrs]

Watch this vid and see where the money goes. See how your being robbed. You will learn how it takes a bank to rob a bank at your expence. You will see how this effects the poor and why they get poorer.

www.ideachannel.tv

[marcosis78]

I heard on CBS or ABC that lowering interest rates actually raises oil/gas prices because it devalues the dollar (as if it can get any less). Is that true?

[tylenol6]

Wake up people....The federal reserve is not really the
federal government. They are a bunch of elitist bankers.
The federal reserve is a FRAUD......Vote for Ron Paul.
Guaranteed you will like what he has to say. Everything
he has said about the economy has come true. Listen to
Ron Paul.

[downsteamjim]

Growth of 0.6% is a new definition of recession.

[gkc99]

Bushit: "Americans don''t save enough".

Bushit: "Drop interest rates more and bail out my billionaire banker friends! F*ck the savers--isn''t 1% enough for those greedy bustards?

[pensacola88]

I have seen the interest rate go down for the banks, but I have not seen them pass this discount through to me. The only one who makes more money on this is the banks. Subsidizing a bank amounts to corporate welfare. I can see how a CEO of a national bank can assure himself a profit and keep a nice bonus active for himself and his senior staff, but I have never seen the tellers I visit talk about ever seeing a penny of benefit.

If a bank can''t survive, close it!!! If a bank can''t make money offering credit, stop offering credit!!! The same rules that apply to me should apply to banks.

[pensacola88]

I have seen the interest rate go down for the banks, but I have not seen them pass this discount through to me. The only one who makes more money on this is the banks. Subsidizing a bank amounts to corporate welfare. I can see how a CEO of a national bank can assure himself a profit and keep a nice bonus active for himself and his senior staff, but I have never seen the tellers I visit talk about ever seeing a penny of benefit.

If a bank can''t survive, close it!!! If a bank can''t make money offering credit, stop offering credit!!! The same rules that apply to me should apply to banks.

[pensacola88]

I have seen the interest rate go down for the banks, but I have not seen them pass this discount through to me. The only one who makes more money on this is the banks. Subsidizing a bank amounts to corporate welfare. I can see how a CEO of a national bank can assure himself a profit and keep a nice bonus active for himself and his senior staff, but I have never seen the tellers I visit talk about ever seeing a penny of benefit.

If a bank can''t survive, close it!!! If a bank can''t make money offering credit, stop offering credit!!! The same rules that apply to me should apply to banks.

[gullly815]

With this new rate cut, senior citizens are seeing another decrease in their incomes. Those of us who roll over CD''s, hold Bank Money Markets etc. are again being penalized, by having our income reduced.

How are we suppose to go out and spend money, when we are forced to live on less than we previously had?

The Fed does not take this consumer angle into consideration when they make these rate decreases.

Whose watching out for us and our income?

[mcv57]

More devaluation of the dollar for the poor; more monopoly credit for the rich.