Fed reduces key rate by one-quarter point

By SHAWN A. TURNER
3:02 pm, October 31, 2007

For the second time this year, the Federal Open Market Committee has reduced the federal funds rate by a quarter-point, this time to 4.5%.

In lowering the rate, which is the rate banks charge either other for overnight loans, the Fed said in a statement that it hoped to protect the economy from “disruptions in financial markets.”“Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance,” the Fed said.

“However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction.”Reacting to the news, at least one Northeast Ohio bank lowered its prime lending rate. Cleveland-based KeyCorp dropped its rate to 7.5% from 7.75%.