The U.S. Interest Rate Further Cut by 0.25 Percent Point

The U.S. Federal Reserve Board (FRB) held the Federal Open Market Committee (FOMC) on Dec. 11 and cut a key interest rate for federal funds by 0.25 percent point from 2.0 percent to 1.75 percent.

The FRB also reduced its discount rate, the interest it charges to land money directly to banks, by 0.25 percent point to 1.25 percent.

The U.S. federal funds rate marked the lowest level in 40 years since July 1961. The FRB cut interest rates 11 times his year, and the key interest rate was cut by 4.75 percent point from 6.5 percent at the beginning of this year.

The FRB pointed out in its statement released on that "economic activities are still weak, and said that "weakness in demand shows signs of abating, but as of yet those signs remain preliminary and tentative." indicating that additional interest rate cuts may be undertaken. Next FOMC will be held for two days from Jan. 29 next year.

However, the stock market was not affected largely by the news because the interest cut had been anticipated.

The New York stock market`s Dow Jones industrial average increased momentarily after the news about the interest cut was released, but took a downward trend as a result of disappointing news about profit warning and concluded at 9,888.37, a fall of 33.08 point from that of the previous day.

Han Ki-Heung eligius@donga.com