Fed Cut Interest Rate to 2.25%

Fed cut its lending rate by 0.75%, less than the expected 1%, to 2.25%; the lowest since Feb 2005. The cost of direct loans from the central bank was also reduced to 2.5%. Stock rally and dollar rose against the yen.

Since Aug 07, when the US subprime mortgages effect was being felt, Fed has reduced its benchmark overnight rate 6x, and discount rate 8x. There were at least $195b in writedowns and credit losses so far.

Home prices continued to decline with more foreclosures. The S&P Case-Shiller home price index has dropped 9.1% from Dec 06.

* Bloomberg-Fed , CNBC-Fed , CNA-Fed , AsiaOne-Fed *