US Fed cut interest rate by three-quarter point

Just before the US markets opened on Tuesday, the US Federal Reserve (Fed) took a dramatic decision by cutting the interest rate by 0.75% to 3%. The Fed reacted to global market turmoil and took this unprecedented step to shore up its own economy. This is the biggest ever interest rate cut in the past 26 years, as the last Fed cut was 0.75% in 1982.

European markets saw slight recovery, but overall market response was still not remains below average. It is expected that US Federal Reserve's rate cut will have a positive impact on Indian market when it opens tomorrow. It could be recalled that Financial Services firm UBS predicts recession in US economy in first half of 2008, which triggered the fall of stock markets across the globe. UBS had also said US GDP is expected to contract 1% in 2008.