A Taste of Wellness for Savoury and Snacks
Givaudan
The three-quarters of a percentage point cut to the federal funds rate is said to be the biggest one-day cut in over two decades.
The interest charged between banks on overnight loans was lowered to 3.5 percent, from 4.25 percent. Media reports are labeling the move - which came as a rare action between scheduled committee meetings - a "dramatic" signal that the Fed is concerned about a possible recession in the country.
If such fears were to materialize, the food and nutraceuticals industry would not escape the far-reaching implications of a plunge in overall economic activity. Amongst the primary consequences would be a decline in investment - which would put the breaks on expansion activities, mergers and acquisitions.
In a statement issued today, the Federeal Open Market Committee said it lowered the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."
"While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households."
The US stock plunge was spurred by a global sell-off yesterday on fears of a weakening US economy.
The New York Times reported that stock futures briefly improved after the move, but then fell back and resulted in a "sharp drop" when markets opened today.
Analysts said that the timing of the cut highlights the gravity of the situation.
"The world's stock markets are in meltdown so the Fed came in with an inter-meeting move to try to stop the panic," Christopher Rupkey, senior economist at Bank of Tokyo-Mitsubishi told The Atlanta Journal-Constitution.
Although the Federal Reserve said it expects inflation to moderate in coming quarters, the timing and scale of its action is a clear indication of concern at the nation's economic state.
"Appreciable downside risks to growth remain," it said.
It added: "The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks."
In a related action, the Board of Governors approved a 75-basis-point decrease in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Chicago and Minneapolis.