Job Figures Stayed Bleak in Latest Month; Fed Acts Again to Cut Rates, Aid Economy --- Interest on Federal Funds To Slip to 6%; Some See End to Policy of Easing
WASHINGTON -- The Federal Reserve eased credit another notch Friday, continuing its effort to revive the economy.</br></br>The move, which came shortly after the Labor Department announced a jump in the unemployment rate for February to 6.5%, will lower the interest rate on federal funds by a quarter of a point, to 6%. The federal funds rate is the rate on overnight loans between banks. It remains unclear what effect, if any, that move will have on mortgage rates or other bank lending rates.</br></br>In the credit markets, short-term interest rates fell slightly after the Fed's action, but interest rates on long-term bonds rose.</br></br>Chairman Alan Greenspan and other top Fed officials have said recently that the U.S.'s recession may be bottoming out, suggesting that the Fed's attempts to ease credit could end soon. However, Mr. Greenspan also has expressed concern that a "credit crunch" is still restricting bank lending and hurting the economy.</br></br>In the financial markets, many traders seem to share the view that the economy is looking up and that the Fed's campaign to ease credit is all but over. "The markets appear to perceive this as the Fed's last easing move," said Robert Johnson, vice president, global markets, at Bankers Trust New York Corp.