In concert with six major central banks, the Federal Reserve today lowered its target for the federal funds rate by 50 basis points in an attempt to prevent further global economic turmoil.

The federal funds rate, which is the rate banks charge each other for overnight loans, was slashed from 2 percent to 1.5 percent. The People’s Bank of China, the Bank of Canada, the Bank of England, the European Central Bank, Sveriges Riksbank (Sweden) and the Swiss National Bank also announced reductions in policy interest rates today.

According to a statement released today by the Federal Open Market Committee, "incoming economic data suggest that the pace of economic activity has slowed markedly in recent months. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit. Inflation has been high, but the Committee believes that the decline in energy and other commodity prices and the weaker prospects for economic activity have reduced the upside risks to inflation."

The Fed believed the urgency of the situation justified action before its regularly scheduled policy meeting Oct. 28-29.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1.75 percent. The discount rate is the rate the government charges to make short-term loans to banks.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription