The new benchmark interest rate is the lowest in history. While the rate cut was expected to come from the Federal Reserve’s quarterly meeting, analysts did not expect such a deep cut.

Consumers will not immediately feel the impact of the cut, but experts say it will soon be reflected in substantially lower mortgage and personal loan rates, both of which could help boost home and car sales.

The rate had been at 1%.

The Fed also announced that it would print as much money as necessary to revive credit markets and fight what is shaping up as the nation’s worst economic downturn since World War II, according to the New York Times.

“The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth,” the Fed said in a statement yesterday, including buying quantities of mortgage-related bonds, long-term Treasury bonds, corporate debt and even consumer loans.

In its statement, the Fed admitted that the recession is worse than first thought. “Overall, the outlook for economic activity has weakened further. Labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined.” (Tire Review/Akron)