Stocks cheer latest cut in rates

By: Art Of Saving Home Loans 1 Follower


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WASHINGTON — The Federal Reserve, battling recession and a fearsome credit crunch, cut interest rates by a hefty three-quarters of a percentage point Tuesday and said the economic outlook has deteriorated, suggesting more rate cuts could be on the way.

Stock prices took their biggest jump in more than five years Tuesday after the Federal Reserve cut interest rates by a dramatic three-quarters of a percentage point and suggested more cuts could be coming.

In an 8-2 vote, Fed policymakers cut their target for short-term rates to 2.25%, the lowest in more than three years. The cut matched the most aggressive move since they began targeting the rate in 1990. The Fed has cut the rate from 5.25% since September.

Investors cheered. The Dow Jones industrial average rose 420 points, or 3.5%, the biggest point gain since July 2002.

President Bush, in a speech in Jacksonville, said the economy is in a "challenging time," but said the government had acted swiftly to aid struggling homeowners in passing a stimulus plan in February.

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