U.S. central bank policymakers are meeting Tuesday to consider an interest rate cut to ease a U.S. credit crisis and stimulate the struggling economy.
Some economists say the Federal Reserve may reduce its key rate by as much as one percentage point, a significant step not seen for two decades. The key rate is currently at three percent.
Expectations of a major rate cut helped U.S. stocks rally in morning trading, with the Dow, NASDAQ and S&P 500 indexes all gaining more than two percent.
Stocks also got a boost from U.S. investment banks Goldman Sachs and Lehman Brothers, which said quarterly profits fell less than analysts had expected.
The results reassured many investors only two days after U.S. investment bank Bear Stearns was forced to sell itself to rival bank J.P. Morgan Chase in a rescue deal engineered by the Federal Reserve.
U.S. Treasury Secretary Henry Paulson acknowledged Tuesday that the U.S. economy is experiencing a sharp downturn. He says U.S. policymakers are working to prevent financial market turbulence from worsening the economic situation.
Major stock indexes in London, Frankfurt and Paris were gaining around three percent, while benchmark indexes in Tokyo and Hong Kong closed up more than one percent.
Source: By VOA News
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