Released: October 31, 2007

Fed cuts key rate another quarter-point

Source: Sue Kirchhoff, USA Today

The Federal Reserve cut a key short-term interest rate by a quarter-point to 4.5% on Wednesday, seeking to support troubled financial markets and shore up the collapsing housing sector.

The central bank also warned markets not to count on further rate cuts, however, saying spiking prices for oil and other commodities were helping to fan new inflation concerns.

“Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance,” the Fed said in a statement announcing the move. “However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction.”

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