Fed Cuts Key Rate To Record Low

WASHINGTON — The Federal Reserve entered a new era on Tuesday, lowering its benchmark interest rate virtually to zero and declaring that it would now fight the recession by pumping out vast amounts of money to businesses and consumers through an expanding array of new lending programs.

Going further than expected, the central bank cut its target for the overnight federal funds rate to a range of zero to 0.25 percent and brought the United States to the zero-rate policies that Japan used for years in its own fight against deflation
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This is the rate in which banks charge each other when they lend money to one another. The problem has been that they are very hesitant about lending any money to one another, which in turn effects businesses mostly.