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Short-term rate back to 2004 level

Fed now expected to pause at 2%

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In what's expected to be the last in a series of cuts in short-term interest rates for now, the Federal Reserve today cut its target for the federal funds overnight rate by 25 basis points, to 2 percent -- the lowest level since 2004. Two members of the Federal Open Market committee voted against the move, saying that it was time to end a series of cuts and leave the rate banks charge each other to lend money overnight at 2.25 percent. Having brought the federal funds rate down from 5.25 percent in seven consecutive meetings since September, the Federal Reserve is now widely expected to step back and assess the impact of those cuts. "The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity," committee members said in a statement. While lowering short-term interest rates stimulates the economy by encouraging borrowi...