Interest Rate Cut by a quarter percentage

The US Federal Reserve cut interest rates by a quarter percentage point to 4.5 per cent yesterday, as widely expected. Ben Bernanke, the Fed's chair, and his colleagues obviously decided to give the markets a treat rather than a trick. Wall Street welcomed the move by the Federal Open Markets Committee, although some analysts were disappointed that the Fed hadn't opted for a deeper reduction of 50 basis points.

The cut follows the bold half percentage-point reduction in September, implemented at the height of the credit squeeze. Policymakers have now lowered their target rate for overnight loans between banks by 0.75 percentage point in six weeks, the most aggressive easing since the US economy was emerging from its last recession in 2001.