Fed lowers rates to 1%

The Federal Reserve, in an effort to boost credit, cut key benchmark interest rates by half a point yesterday, leaving it at 1%, the lowest since June of 2004.

The cut marks the second reduction in the funds rate this month, as it was already reduced by half a point on October 8th.

The Fed justified the decision saying there are still major threats to economic growth and did not rule out the possibility of further reductions.

This move is the latest by the Fed to reactivate credit, increase spending, and hence increase financial activity. As a result, stock markets went up, including Wall Street.