US Fed cuts discount rate 0.5 pct points to 5.75 pct |
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Published
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Fri, 17 Aug 2007 13:47
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WASHINGTON (Thomson Financial) - The Federal Reserve has cut its discount rate half a percentage point to 5.75 pct. The discount rate is the rate the Fed charges banks to borrow from it. The Fed said it was acting 'to promote the restoration of orderly conditions in financial markets.'This narrows the spread between the Fed's target 5.25 pct overnight money market rate and the rate it makes on its own direct loans to banks.The decision also extends the terms of the Fed's loans 'to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially.'The Fed's statement says the changes are designed to provide banks with 'greater assurance about the cost and availability of funding,' thus easing fears about liquidity.dennis.moore@thomson.comdem/wash/sljCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
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Fed approves reduction in discount rate 