The Fed’s target for the federal funds rate, which influences consumer and business loans, is now 5%. It started the year at 6.5% and was cut twice in January.
Economists had predicted that the rate would be slashed three-quarters of a point instead of a half. That amount would have tied the largest single-day reduction since the central bank began targeting rates in 1983.
The last time the Fed moved its target 75 basis points was on November 15, 1994, when it raised it to 5.5% from 4.75%.
The Fed also cut its discount rate, what it charges banks to borrow directly from the Fed, by half a percentage point, to 4.5%. That rate was cut a half a point on January 31.