MercoPress. South Atlantic News Agency

Record low interest rate in US

The United States Federal Reserve cut interest rates an additional 25 points to 1,75%, the eleventh cut so far this year, and the lowest since 1961. In an official release the Open Market Federal Reserve Committee reports that "economic activity in the US remains soft, with underlying inflation likely to edge lower from the relatively modest levels", adding that in spite of some recovery signs, these "were preliminary and tentative". Economists agree that it takes almost nine months for rate cuts to trickle down and have a full impact. Analysts believe the Federal Reserve is determined to keep cutting rates if necessary to boost the US economy, officially in recession since last March. This in spite of the fact that the basic rate is now actually below zero in real terms. The Federal Reserve has tried to combat the declining activity of the US economy with an aggressive interest rate cuts policy. So far signs are mixed: retail sales seem to be recovering but unemployment is increasing, and a report from the National Association of Purchasing Management said this week that its members believe the US economy will resume growth in 2002, but job prospects remain soft.