Fed Cuts Funds Rate By Three-Fourths Of A Point

WASHINGTON D.C. (AP) — It isn’t the full one percent interest rate cut that some observers had called for. But the Federal Reserve has cut interest rates by three-quarters of a point.

The move takes the benchmark federal funds rate to 2 and a-quarter percent, to try to stem the credit crisis that has continued to weaken the housing market and helped bring down Wall Street’s Bear Stearns.

The central bank says the outlook for economic activity has weakened further and that financial markets remain under considerable stress.

It also says inflation has been elevated, but adds that pricing pressures should moderate.

Wall Street continues to send stock prices solidly higher. In the hour following the rate cut decision, the Dow was up more than 300 points.