The Fed Tries Again

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WASHINGTON, D. C.: Hoping that its third interest rate cut in the past eight months will provide a kick-start to a gradually slowing economy, the Federal Reserve Wednesday lowered short-term interest rates one quarter point to 5.25 percent. Commercial banks quickly followed the move, dropping their prime lending rates to 8.25 percent. The White House welcomed the Fed's action, hoping that lower interest rates will encourage consumers to borrow and spend more. The cut came despite new government figures released Wednesday that show wholesale prices rose 0.5 percent for the second month in a row. The Fed said in a statement released after the cut that it believed inflationary pressures would not be overheated by the gentle stimulus the interest rate cut will provide.