California Business Minute™

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Hi, I am Tim Johnson and welcome to the California Business Minute.

The Federal Reserve cut its benchmark interest rate by 0.75 points to 2.25 per
cent on Tuesday, the latest of a series of dramatic attempts to boost the sagging
US economy and temper volatility in global financial markets.

The Federal Open Market Committee voted 8-2 to cut the fed funds rate from 3%
to 2.25%, its lowest level since December 2004, while signaling more reductions
remain likely in its effort to keep the credit crunch from triggering a prolonged
downturn in the economy if not a recession.

The Fed's statement said: "Recent information indicates that the outlook for economic
activity has weakened further. Financial markets remain under considerable stress,
and the tightening of the credit conditions and the deepening of the housing contraction
are likely to weigh on economic growth over the next few quarters."

The 8-2 decision followed emergency action on Sunday that saw the Fed cut its discount
lending rate to banks. Since the first of the year the Fed has cut rates by 2 percent.

I am Tim Johnson and this has been the California Business Minute.

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