Fed cuts discount rate

WASHINGTON (AP) — The Federal Reserve is taking dramatic action to restore calm in global financial markets amid the turmoil triggered by a widening credit crisis.

The Fed is declaring that the increased economic uncertainty poses risks for U.S. business growth and it is approving a half-percentage-point cut in its discount rate on loans to banks.

The discount rate is being lowered to 5.75 percent, from 6.25 percent.

The Fed did not change its target for the more important federal funds rate, which has remained at 5.25 percent for more than a year.

However, it has been infusing billions of dollars into the banking system over the past week to keep that rate from rising above the target level.

And many economists believe if the financial market crisis worsens, the Fed will also move to cut the federal funds rate.