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Fed makes second rate cut in eight days

By Furniture Today Staff -- Furniture Today, February 3, 2008

For the second time in eight days, the Federal Reserve made a cut in the federal funds rate last week, this time by 50 basis points — double what had been predicted. The new rate is now 3%.

"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets,' said the Federal Open Market Committee in making the announcement.

The committee said it monitoring inflation prospects carefully in the coming months. It also hinted that more rate cuts may be in the cards because "downside risks to growth remain," and the committee "will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks."

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3.5%.

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