Fed Cuts Rates by 0.5%

November 6, 2001 (PLANSPONSOR.com) - As anticipated, the Federal Open Market Committee slashed its target for short-term interest rates by a further half a percentage point.

The cut lowers the fed funds rate, which influences borrowing costs throughout the economy, to 2.0%, its lowest level since the 1960s.

“Heightened uncertainty and concerns about a deterioration in business conditions are dampening economic activity,” the Federal Reserve said in a statement announcing the cut.

The statement also noted that “although the necessary reallocation of resources to enhance security may restrain advances in productivity for some time,” the Fed remained positive about the long-term prospects for growth.

This is the tenth time this year that the FOMC has cut rates, and many analysts believe that this is the end of the easing cycle.

See also: The Fed’s News Release