US Federal Reserve cuts interests by 0.5%

The US central bank, the Federal Reserve, has cut interest rates by 0.5% to 5.5%. This is the second rate cut during January 2001, as Fed chairman Alan Greenspan seeks to stop the slowing US economy plunging into recession. The Fed took the markets by surprise just four weeks ago, cutting rates from 6.5% to 6% in an extraordinary meeting on Jan. 3.

The cut on Jan. 31 was more widely expected, but opinion was divided about how big the cut would actually be. An accompanying statement from the