Fed Cuts Interest Rates By Quarter-Point

The Federal Reserve cut U.S. interest rates by a quarter-percentage point on Wednesday and left the door open for further reductions, saying the risks remain weighted toward economic weakness, rather than inflation.

“The patterns evident in recent months -- declining profitability and business capital spending, weak expansion of consumption and slowing growth abroad -- continue to weigh on the economy,” the Fed said in a statement.

Financial analysts who follow the trucking industry note that any rate cut can immediately reduce monthly interest expenses for some trucking operations, if they carry large floating-rate debt on their equipment.

Of the six times the Fed has reduced interest rates so far this year, this was the smallest cut. The other five cuts were a one-half point each.

According to news reports, analysts said an improved economic outlook and lower gasoline and energy prices were the main reasons why the Fed went with a smaller cut.

This move leaves the federal funds rate, a benchmark for short-term rates throughout the economy, at 3.75%. During the past 10 years, the rate has gone as low as 3%, from September 1992 until February 1994.

The central bank also chopped the discount rate -- charged on direct Fed loans to commercial banks -- by a quarter-percentage point to 3.25%.

Economists told the Associated Press they are hopeful that the cuts coupled with the $1.35 trillion tax relief bill will boost economic growth in the coming months.