Fed cuts interest rates 3/4 of a point

In a surprise move that underscores the depth of recession fears, American central bankers cut a key interest rate by 3/4 of 1 percent.

The Federal Open Market Committee, the rate-setting group of the Federal Reserve Board, had been scheduled to meet next week, but in an emergency session, cut the federal funds rate Tuesday morning from 4.25 percent to 3.5 percent.

"The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth," the FOMC said in a statement accompanying its action. "While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.  Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets."

Credit cardholders with variable rate cards may see at least some of that rate cut passed along at the end of their card issuers' monthly or quarterly cycles, which could help some people barely able to make minimum payments stay afloat a while longer. Unless you have a high card balance, though, the rate cut is unlikely to have a large impact.