Fed Issues Third Key Rate Cut in Three Months

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The Federal Reserve cut a key interest rate by one-quarter of a percentage point to 4.25 percent Tuesday.

Wall Street plunged after the Fed's announcement, which disappointing investors who hoped the central bank would move more aggressively to help the economy. It's the third cut in three months, and it comes amid a worsening mortgage crisis, a housing slump and a credit crunch. The question is whether the United States is fighting off a recession.

Brandeis University economist Stephen Cecchetti, who was executive vice president and director of research at the Federal Reserve Bank of New York in the late 1990s, talks with Robert Siegel about what the Fed's move means.



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