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Fed delivers rate cut
Central bank gives Wall Street the half-percentage point cut investors expected, also trims discount rate
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See all CNNMoney.com RSS FEEDS (close) By Chris Isidore, CNNMoney.com senior writer
January 30 2008: 2:19 PM EST


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A weaker-than-expected economic report sets investors on edge as they await the Fed decision.
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NEW YORK (CNNMoney.com) -- The Federal Reserve cut a key short-term interest rate by a half-percentage point Wednesday, its second significant cut in just over a week, as the central bank tries to combat the growing risk of a U.S. recession.

The federal funds rate, an overnight bank lending rate that affects how much interest consumers pay on credit cards, home equity lines of credit and auto loans, was cut to 3.0% from 3.5%. The rate had stood at 5.5% only four months ago.

The discount rate, which is what banks pay to borrow directly from the Fed, was also cut by a half-percentage point to 3.5% on Wednesday.

The Fed cut both rates by three-quarters of a percentage point in an emergency move on Jan. 22.

The rate cuts come on a day the government reported that economic growth slowed significantly in the last three months of 2007, matching its weakest performance of the past five years. It also comes as Congress rushes to pass a $150 billion economic stimulus package to spur spending by both consumers and businesses.