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WASHINGTON: The U.S. Federal Reserve reduced short-term interest rates for the seventh time in seven months on Wednesday, the latest in a series of measures it has taken to stabilize financial markets. The central bank lowered its federal funds rate — the rate it charges banks for overnight loans — by a quarter of a percentage point, to 2 percent from 2.25 percent.
"My view is that the Fed is back doing the silly things it did in the 1970s, of trying to make judgments that have long-term consequences based on short-term data," said Allan Meltzer, professor of political economy at Carnegie Mellon University. "It should get back to the period of 1985 to 2003 known as the Great Moderation."
The Fed's recent move, coupled with the uncertain performance of the economy, appeared likely to deepen the partisan impasse in Washington over how to respond to joblessness, the mortgage crisis, energy costs and other problems.