The Federal Reserve cut short-term interest rates by a quarter-point today, the sixth rate cut this year. The Fed lowered its target for the federal funds rate, what banks charge each other for overnight loans, to 3.75% from 4.0%. It also lowered another short-term rate, the discount rate it charges banks for emergency loans, to 3.25% from 3.5%.
Since the first of the year, the Fed has reduced its target rate 2-3/4 percentage points, the most aggressive period of rate-cutting ever by the Alan Greenspan-chaired Fed.
The Fed cuts rates to encourage the nation's biggest banks to cut their own interest rates, making money more readily available to consumers and businesses in the hope that they'll spend more to boost the economy. Commercial banks are expected to trim borrowing costs for consumers and businesses immediately to boost the economy.