"The Federal Reserve will continue to supply unusually large volumes of liquidity to the financial markets, as needed, until more normal market functioning is restored," the Fed said in a statement.
The cuts, the eighth by the Fed this year, came six days after the attacks on New York and Washington, and were announced just before U.S. stock markets opened. The cuts were widely expected as the central bank seeks to keep funds flowing through the economy and boost consumer confidence in wake of the attacks.
The Fed cut its target for short-term rates to 3.0% from 3.5%, the lowest level since September 1992, in a bid to make money more accessible to consumers and help avoid a recession. It also cut the seldom-used discount rate to 2.5% from 3.0%.
The action came after an emergency conference call among Fed policy-makers at 7:30 a.m. ET, news agencies reported.
