The U.S. Federal Reserve has cut the country's short-term interestrate by three-quarters of a percentage point to a target range of zeroto 0.25 per cent.
That is the lowest level on record for the United States.
In announcing the cut Tuesday, the Fed said U.S. labour and marketconditions, consumer spending, business investment and industrialproduction are all falling.
"Financial markets remain quite strained and credit conditionstight. Overall, the outlook for economic activity has weakened further."
The economy is so bad that the rock-bottom rate is likely to continue for some time, the central bank said.
It also promised to use "all available tools" to get the U.S.economy moving. As it said previously, it will buy large quantities ofdebt and mortgage-backed securities to support to the mortgage andhousing markets.
It's also considering buying longer-term bonds to push down long-term interest rates.
While the Fed was worried about inflation earlier this year, thoseconcerns have eased with falling commodity prices and the economy'sweaker prospects.
The cut was announced by the Fed's monetary policy committee after atwo-day meeting to consider its response to what some are calling theworst U.S. economic conditions since the 1930s.
Many economists believed the Fed would cut interest rates in half onTuesday to 0.5 per cent to spur the economy, but some wanted a moreaggressive 0.75 percentage point cut.
Last week, the Bank of Canada cut its overnight rate bythree-quarters of a percentage point, bringing it down to 1.5 per cent,a 50-year low.