Fed Cuts Rates by 75bps to a New Record Low

The U.S. Federal Reserve decided on Tuesday to lower its Fed Funds rate by 75 basis points to 0.25 percent, the lowest level for the overnight rate ever. In particular, the Fed is concerned about the deterioration in the labor market, tight credit conditions and the ongoing contraction in the housing market which is likely to weigh on economic growth over the next few quarters. More importantly, the Fed anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time, according to the Federal Open Market Committee (FOMC) statement released today.