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Fed cuts short-term rates to the bone

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The Federal Reserve slashed short-term interest rates today to nearly zero, bringing to an end a 15-month campaign of rate reductions intended to encourage borrowing and stimulate economic growth. With further cuts no longer possible, members of the Fed's open market committee promised to continue to "employ all available tools" to support financial markets and stimulate the economy, including purchases of mortgage-backed securities and other debt. In cutting the target for the federal funds overnight rate to a never-before-seen low -- between zero and 0.25 percent -- the committee acknowledged that as weak as the economy is, it's likely to stay at "exceptionally low levels ... for some time." The committee also cut the discount rate -- the rate the Fed charges banks for short-term loans -- from 1.25 percent to 0.5 percent. Today's action was the last of 10 reductions in the federal funds rate intended to stimulate economic growth. Before the cuts ...