FED CUTS INTEREST RATES

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For the first time in nearly three years, theFederal Reserve cut interest rates by one-fourth of a point today, in hope that easing borrowing costs might prevent the U.S. from slipping into recession. "They did the bare minimum they could to tell the markets they were concerned," saysTIME's Suneel Ratan. It seems to be working: while at least two major banks reduced their consumer loan rates to 8.75 percent, the Dow Jones Industrial Average surged more than 48 points to close at another record 4,664. But Ratan notes that the markets were counting on the move: "Ordinarily, the impact of Fed cuts is not felt for 16 to 18 months.But longterm interest rates have dropped in anticipation of the Fed easing up, and with this move, they'll stay down. That should give the economy the stimulus it needs." Many economists, seizing on rosier reports last week, had expected the Fed governors to stand firm unless new employment figures due out Friday jolted them into action. "Now, if that number dropped like a rock again, the Fed will look that much better," Ratan says.