Fed
Chairman Ben Bernanke and his colleagues ratcheted down their key rate
by 0.5 percentage point to 1.5 percent. The action revives the central
bank's rate-cutting campaign which had been halted in June out of
concerns that those low rates would worsen inflation. Since then,
however, economic and financial conditions have dangerously
deteriorated, forcing the Fed to reverse course.

The fact that the Fed felt it couldn't wait until its
regularly scheduled meeting on Oct. 28-29, underscored the urgency of
the situation.

The Fed took the action in a coordinated move with other central banks, which also were cutting their rates.

"The pace of economic activity has slowed markedly in
recent months," the Fed said "Moreover, the intensification of
financial market turmoil is likely to exert additional restraint on
spending, partly by further reducing the ability of households and
businesses to obtain credit."

Although inflation has been high, the Fed believes that
the recent drop in energy prices and the weaker prospects for economic
activity have reduced this threat to the economy.

--Associated Press