Federal Reserve slashes key interest rate

In response to global markets plummeting and in “view of a weakening of the economic outlook and increasing downside risks to growth,” the Federal Reserve cut the federal funds rate by 0.75 points to 3.5 percent.

Treasury Secretary Henry Paulson said Tuesday that the Bush administration is monitoring “economic signals closely” and stated that his confidence in the “underlying strength of the global economy remains.”

{mosads}The Federal Reserve’s emergency move shows the urgency of the situation and puts additional pressure on the White House and Congress to quickly pass a stimulus package.

“We will work with Congress to quickly enact a broader temporary growth package to support our economy this year, as we weather the housing correction,” Paulson said. “The President has asked me to lead this effort, and so far we are engaged in a collaborative, bipartisan process that should result in a robust, broad-based, temporary growth plan that can be swiftly passed and enacted.”

Since returning to work, congressional leaders from both parties have been adamant about their desire to work together to boost the economy and Bush has outlined a $145 billion plan that includes tax relief for individuals and businesses as the basis for such a consensus approach.

The president and congressional leaders are scheduled to discuss the issue Tuesday afternoon.