The Federal Reserve Board cut the federal funds rate target 75 basis points to 3.50% yesterday, ahead of its meeting next week.

A statement from the Fed, which announced the cut, said the Federal Open Market Committee “took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.”

The statement added that the FOMC “expects inflation to moderate” in the near term, “but it will be necessary to continue to monitor inflation developments carefully.”

“Appreciable downside risks to growth remain. The committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks,” according to the statement.

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