Fed Cuts Key Rate by Half Point to 1%

Updated from 2:19 p.m. EDT

The Federal Reserve dropped its benchmark interest rate target by 50 basis points to 1% on Wednesday, a widely anticipated move intended to help free up the credit markets.

The Fed funds rate target is now 1%, the lowest level in more than four years. In announcing its decision, the Federal Open Market Committee cited a drop in spending by consumers and businesses, and predicted that consumption may slow further due to tighter lending standards.

"The pace of economic activity appears to have slowed markedly," the FOMC said in a statement, "owing importantly to a decline in consumer expenditures." ...