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Show DAILY Thursday, January 31, 2008 Interest rate markets remain fragile. In the gravest challenge to companies to help energize an economy in danger of stalling. Heartened by the Fed's newfound aggressiveness, Wall Street rallied but then pulled back, still nervous. The Dow Jones industrials jumped more than 200 points after the announcement but ended up down 37.47. Commercial banks followed the Fed action by lowering their prime lending rate by the same half percentage point to 6 percent, the lowest in nearly three years. That prime rate applies to certain credit cards, home equity lines of credit and other loans. Hours before the Fed's action, the government reported that the nation's economic growth had stumbled to a virtual halt. The economy grew at just a 0.6 percent pace from October through December, and for all of 2007 it logged its weakest performance in five years. The collapse of the housing market, sour mortgage investments and much harder-to-ge- t credit are weighing on people and businesses alike. Foreclosures have hit record highs, and banks have racked up multibillion-dolla- r losses. The fallout has shaken Wall Street, catapulted the economy to Topic A among worried families and galvanized political figures, including those vying to be the next president. "The economy is hanging by a tliread," said Stuart Hoffman, chief economist at PNC have taken Bernanke to task for waiting until September of g last year to embark on a campaign, accusing the Fed chief of being behind the curve in dealing with the economy's problems. J X The economy may actually be declining now. Under one rough rule, it would have to contract for six months in a row for the country to be considered in a recession. The like--, lihood of a recession has risen sharply over the past year, and analysts increasingly believe the U.S. will be in one during the first half of 2008. The worry is that people and businesses which turned more cautious at the end of the year will hunker down, sending the economy into a tailspin. four years. rate-cuttin- A3 approved by the government. Neither effort will quickly cure t he root cause of the economy's troubles: a severely depressed housing market and bad mortgage investments. ing quarters but added that it is imperative to monitor developments carefully. Still, more rate cuts are expected at the Fed's next scheduled meeting in March and beyond. Some economists predict the key rate could drop as low as 2 percent this year, which would be the lowest in his leadership since becoming Fed chief nearly two years ago, Bernanke must help stem the fallout from both the housing bust and a credit crunch. Wall Street critics and others Continued from A 1 HERALD "The Fed needs to throw out a life raft to the economy pending the fiscal stimulus measures," said Brian Bethune, Bernanke also must be mindeconomist at Global Insight. Even further action might ful, of nc letting inflation get out of hand a delicate and not avert a recession but tricky maneuver. Oil prices have rather limit the damage. The receded from $100 a barrel but interest rate cuts will take still remain high. The Fed said it months to affect the economy, expects inflation to ease in com- - as will any stimulus package - - J 4 - a .. M. SPENCER GREENAssociated Press Joseph Borsellino reacts to the markets in the S&P 500 futures trading pit at the Chicago Mercantile Exchange. ' Financial Services Group. While Wednesday's interest rate cut was welcome, the Fed's blunt new assessment of 65 60 OFF ORIGINAL PRICES COATS FOR HER A. 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