Fed: Emergency cut

Fed joins 5 central banks - cuts 1/2 point and cites 'intensification' of crisis.

Update October 8, 2008

The Federal Reserve, working in coordination with other central banks worldwide, enacted an emergency interest rate cut on Wednesday.

The Fed lowered its fed funds rate by a half percentage point to 1.5%. The central bank's statement said the move was necessary because of the worsening crisis in global financial markets.

"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the Fed said.

The rate cuts are the latest in a series of groundbreaking moves by the world's top central banks to try to breathe life into embattled financial markets. And it's a sign that the problems in the U.S. economy are spreading.

"It tells a lot about the weakness globally," said Lakshman Achuthan, managing director of the Economic Cycle Research Institute. "We have a global recession now. It's not simply a U.S. recession. This is what's weighing on the impact of all of these bailouts."

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