FRS lowers key rate to 1 % from 1.5 % APR

/INTERFAX-AFI, Washington, October 30, 08/ - The USA Federal Reserve System (FRS) on Wednesday decided to lower the key interest rate "overnight" to 1 % from 1.5 % APR, as the bulk of analysts expected, Bloomberg agency reported. Thus, the value of credits lowered to a four year minimum, The Wall Street Journal notes. Decision on retaining money's value was taken unanimously. Discount rate was also decreased by 0.5 interest bearing point - to 1.25 % APR. "The rates of economy activity are likely to reduce affecting consumer expenditures. Business equipment and industrial production costs weakened during the last months with economy recession in most foreign countries deteriorating prospects for American export. Moreover, intensification of market mess is likely to activate supplementary limits for expenses, in particular further decrease of house and business holders` ability to get credits" - said in the document prepared in accordance with the session of Federal Open Market Committee (FOMC). "In the light of decreasing of energy resources and other types of raw materials` value, economy activity forecasts, the Committee expects inflation to slow down in further quarters to the levels compliant with price stability" - FOMC message says. "Recent actions, including today's rate decreasing, on coordinated low of internal rates, extraordinary liquidity measures and official improvement of financial system should help improve credit conditions and contribute to moderate rates of economy growth. However, there is still a risk for economy growth to fall. The Committee will continue to thoroughly supervise economic and financial changes and will act as required to assist a sustainable economy growth and price stability" - the document says. The dollar fell after release of a decision on the rates. The value of the American dollar dropped maximum not seen since 1985 to six national currencies of countries, which are the major trade partners of the USA. ICE Futures' Dollar Index, which follows USD rate to euro, yen, pounds sterling, Canadian dollar, Swedish frank and Sweden crown, fell on Wednesday by 2.7 % - record falling since September 1985. American stock indexes also continued falling after FRS decision on speculations (decreasing of money's value to 1 % APR is not enough to save the economy from the worst economy crisis since the Great Depression. Dow Jones Industrial Average Index by 21:37 Moscow Time fell by 0.6 % - to 9015.66 points. Standard & Poor's 500 also fell by 0.6 %, making 935.06 points. Value of Nasdaq Composite decreased by 0.3 % - to 1645.23 points. [2008-10-30]