The Federal Reserve slashed United States interest rates by a hefty three-quarters of a percentage point on Tuesday, giving a lift to stock markets already jubilant over stronger-than-expected investment bank earnings. Trying to avert a deep recession and financial market meltdown, the central bank cut less than many traders had expected but left the door open to additional reductions.
Former Federal Reserve chairperson Alan Greenspan, in a memoir to be released on Monday, criticised President George Bush and congressional Republicans for abandoning fiscal discipline and for putting politics ahead of sound economics. In his book, Greenspan said he was surprised Bush was unwilling to temper his campaign promises with fiscal reality once elected.
Federal Reserve chairperson Ben Bernanke said on Wednesday this week's sharp stock market drop had not changed the Fed's view that the United States economy was sound, remarks that helped shaken markets regain confidence. His remarks came a day after the US stock market suffered its worst slide since 2001.