Fed Orders Emergency Rate Cut to 1.5 Percent

The Federal Reserve and a consortium of European central banks today announced a half a point cut in a key interest rate, a coordinated effort to stave off an economic slump even as they continue struggling to tackle a crisis in global financial markets.

The announcement reversed sharp losses in European stock markets and buoyed U.S. market futures that were pointing towards another troubled day on Wall Street.

The rate cuts, hinted at by Fed chairman Ben S. Bernanke yesterday then approved by the central bank overnight, reduces the target federal funds rate to 1.5 percent from 2 percent.

Joining the rate cut were central banks in Canada, England, Sweden, Switzerland and the European Central Bank.

With commodity prices falling and concerns about an economic slowdown taking root around the globe, the Fed in a statement said that it was now time to shift the focus from fighting inflation to bolstering growth. Lower interest rates make it cheaper for companies to borrow to invest in plant and equipment, and bring down the cost of a variety of consumer credit options such as bank credit cards and auto loans.