Fed cuts again, but offers some hope

MARKET NEWS

WASHINGTON, DC -- The Federal Reserve cut US interest rates by 25 basis points last week, and although the economic situation remains gloomy, the central bank offered some words of encouragement.

US rates now stand at 1.75%, a 40-year low, and with inflation running higher than borrowing costs real interest rates stand below zero.

"Although the necessary reallocation of resources to enhance security may restrain advances in productivity for a time, the long-term prospects for productivity grow