The U.S. Federal Reserve cut its benchmark interest rate for federal funds - the rate at which banks lend to each other overnight - by half a point to one percent on Wednesday. Other central banks around the world followed suit, also reducing rates or announcing that they were considering the move.

Yesterday’s decrement marked the second big rate reduction by the Fed this month. On October 8, the U.S. central bank led a coordinated global rate cut, dropping the target interest rate here in the States by half a percentage point at that time as well. The current rate of one percent brings the benchmark number close to record-lows hit in 2003, when the Fed was trying to stimulate economic recovery after the Internet bubble popped.
Policy makers are now desperately trying to contain the economic depression that began with the mortgage market, taking a series of what it called “extraordinary liquidity measures” to try and ease credit conditions. Analysts, however, say yesterday’s rate reduction is not likely to have a significant effect at this point. The Fed hinted at the possibility of going still lower in its public statement, warning “downside risks to growth remain.”