Federal Reserve weighs slashing rates to cushion economic damage - WKOW 27: Madison, WI Breaking News, Weather and Sports

Federal Reserve weighs slashing rates to cushion economic damage

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WASHINGTON (AP) -- The Federal Reserve is holding a two-day meeting at which it is widely expected to reduce a key interest rate -- perhaps to an all-time low -- to prevent the sinking economy from getting worse.

  Fighting what many have labeled the worst financial downturn since the 1930s, the Fed already has pushed down its main lever for influencing the economy -- the federal funds rate -- to one percent, a level seen only once before in the last half-century.

  Some economists predict the Fed will cut its rate in half -- to just 0.50 percent when the session wraps up tomorrow.

  Others think the Fed could take even more forceful action -- lowering the rate by a three-quarter percentage point or more.

  If the larger cut occurs, it would be the lowest rate ever, tracking rates going back to 1954.

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