WASHINGTON (Associated Press) – The Federal Reserve cut its key interest rate by one-quarter percentage point to 2 percent Wednesday, bringing the rate to its lowest point in nearly four years.
In turn, the prime lending rate for millions of consumers and businesses fell by a corresponding amount, to 5 percent.
Following the Fed action, Wall Street investors drove the Dow Jones industrial average up more than 178 points, lifting it above 13,000 for the first time since early January. By the end of the day, though, the index was 11.81 points below where it started.
The Fed, which has been dropping rates since last fall, has not removed another reduction from the table. However, a growing number of economists believe the central bank is winding down its rate-cutting campaign.
“The Fed didn’t completely shut the door on rate cuts, but they closed it part way,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think the overall message was they’ve done a lot already to help the economy and think this will be enough. But they stand ready to do more if that is needed.”