NEW YORK. Aug 7: The US Federal Reserve cut money market interest rates by a quarter point on Tuesday in a surprise move to keep the economic recovery on track, economists said, reports Reuter.

The FED. the US central bank, added reserves to the banking system, causing the key federal funds rate to drop to 5.5 per cent from what Is believed to be its 'previous target of 5.75 per cent.

The rate is the amount banks charge one another to borrow funds overnight. It Influences Interest rates throughout the US economy, from mortgage rates to personal loans.

Bonds rose on the move, with the key 30-year US

8.20 per cent from 8.25 per cent at Monday's close.

Tve been expecting the ease, but I was surprised by the timing," said Douglas Schindewolf. economist at Smith Barney, Harris Upham and Co. Inc.