Central bank cuts interest rate to 39-year low

Wednesday, Oct. 3, 2001 | 9:29 a.m.

WASHINGTON -- The Federal Reserve cut its benchmark interest rate by half a percentage point Tuesday to the lowest level in 39 years, continuing its effort to pump some vigor back into an economy that shows all the signs of having lapsed into recession.

Citing the aftereffects of the terrorist attacks, the Fed cut its federal funds target rate on overnight loans among banks to 2.5 percent from 3 percent, putting the rate at its lowest level since 1962.

It was the second half-point rate cut by the Fed since Sept. 11 and the ninth time the Fed has cut rates this year.

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