The US Federal Reserve's 75-basis point reduction in its main
interest rate is "appropriate and helpful," the International
Monetary Fund (IMF) said on Tuesday.
"The United States has been most affected by recent economic and
financial developments. Thus, today's 75-basis point reduction in
the Federal funds rate was appropriate and helpful," IMF spokesman
Masood Ahmed said in a statement.
The Fed made the emergency dive to 3.50 percent before markets
opened Tuesday morning, citing "a weakening of the economic outlook
and increasing downside risks to growth" in justifying the biggest
one-day move by the central bank in recent memory.
"Financial market prices are consistent at present with
expectations of significant future rate declines. In any case,
there is no doubt that the Federal Reserve will respond with
alacrity to new fundamental and financial developments," said
Ahmed.
Meanwhile, he said a "significant 2008 slowing" in the global
economic growth already appeared inevitable, adding that "targeted
and timely" fiscal measures could help boost demand.
Wall Street and most European markets saw a partial rebound
Tuesday after growing worries about a US recession triggered sharp
declines on Asian and European stock markets Monday.
(Xinhua News Agency January 23, 2008)
