Promises to keep rates low and try new tactics WASHINGTON (MarketWatch) - The Federal Reserve pulled out all the stops in its campaign to save the U.S. economy Tuesday, slashing interest rates to just about zero and promising to try an array of new economic measures to stimulate spending. The central bank's Federal Open Markets Committee established at target rate for the federal funds rate of 0 to 0.25%, effectively cutting its key rate for overnight lending to banks by between 0.75% and 1%. U.S. stocks leaped after the decision, with the Dow Jones Industrial Average up more than 200 points. "The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth," the central bank pledged in its policy statement. The move was about as aggressive as the central bank could be on monetary policy, but also signaled that it has moved on to other measures beyond setting interest rates in its fight to keep the economy rolling. The Fed's move followed some of the worst economic data in decades reported in the last few days, including monthly consumer sales numbers that fell the most since 1932. Fed watchers described the Fed action as mostly psychological, as rates are already very low. But the Fed wanted to clearly signal that it is doing whatever it takes to short-circuit the recession which began one year ago and could easily turn into the longest post-war recession. The vote to lower the Fed funds rate was unanimous.

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