Fed Reduces Rates Again In Bid to Bolster Economy --- Action Is Expected to Trim Charge on Federal Funds To About 6 3/4% From 7%
WASHINGTON -- The Federal Reserve cut short-term interest rates another notch yesterday, continuing its efforts to bolster a recessionary economy.</br></br>The action is expected to bring the key federal funds interest rate down to about 6 3/4% from 7% in recent weeks. Other short-term interest rates are likely to decline accordingly.</br></br>The reduction comes barely three weeks after the Fed's last easing move and illustrates the central bank's growing concern about the economy. In addition, the action follows the government's takeover Sunday of the Bank of New England, which has heightened fears that a weak economy could lead to financial crisis.</br></br>"We're in a recession, and as long as we're in a recession, the Federal Reserve will be in an easing mode," says Robert Dederick, chief economist of Northern Trust Co.</br></br>Many economists believe the Fed will have to cut interest rates further to get the economy growing again. But they caution that if the U.S. goes to war against Iraq, any further easing moves by the Fed could be put on hold.