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Fed Cuts Discount Rate, Acknowledging Need for Action (Update7)

By Scott Lanman

Aug. 17 (Bloomberg) -- The Federal Reserve lowered the interest rate it charges banks and acknowledged for the first time today that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world's financial markets two months ago.

The Fed, in a surprise announcement in Washington, cut the so-called discount rate by 0.5 percentage point, to 5.75 percent. Policy makers dropped language indicating their bias toward fighting inflation, and instead highlighted a rising threat to economic growth. That suggests officials will reduce their benchmark rate when they meet Sept. 18, economists said.

``This telegraphs their intention to cut rates at the next meeting,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``This discount rate cut calms the market and helps financing.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=worldwide
 
uscitizen said:
Fed Cuts Discount Rate, Acknowledging Need for Action (Update7)

By Scott Lanman

Aug. 17 (Bloomberg) -- The Federal Reserve lowered the interest rate it charges banks and acknowledged for the first time today that an extraordinary policy shift is needed to contain the subprime-mortgage collapse that began roiling the world's financial markets two months ago.

The Fed, in a surprise announcement in Washington, cut the so-called discount rate by 0.5 percentage point, to 5.75 percent. Policy makers dropped language indicating their bias toward fighting inflation, and instead highlighted a rising threat to economic growth. That suggests officials will reduce their benchmark rate when they meet Sept. 18, economists said.

``This telegraphs their intention to cut rates at the next meeting,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. ``This discount rate cut calms the market and helps financing.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJv5U5SQq6BU&refer=worldwide
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I read today that Bill Gates has put all his US dollars into Euros, should the rest of us follow suit?
 
quite possibly Froggie, but as our economy takes a beating theirs will too.

perhaps the Yen ?

More petro dollars are converting to the euro as well....
 
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More fake money for everyone! WEEEEEE! Nothing like guaranteed inflation to reduce your life savings to nothing!
 
Perehaps I will buy more property, they can't make any more of that.
Can always raise some type of food on it.
 
froggie said:
I read today that Bill Gates has put all his US dollars into Euros, should the rest of us follow suit?
Click to expand...

No you should not. The europeans are currently trying to buy dollars to drive down the value of the euro from its highs. If you want a foreign currency that is rising against the dollar.... look to the east... and the yen.
 
According to the latest report on CNN, the reduction was only on money rates from the Feds to the banks, NOT from Bnk to bank. in other words, more (paper) loans from the public to the banks.(
 
The Fed discount rate is the rate the banks pay to the Federal Reserve banks to borrow money for the short term. The Fed Funds rate is the overnight rate charged by the Federal Reserve bank. BOTH are bank to bank.

The money the banks borrow plus interest is owed back to the public via the Federal Reserve banks.
 
Superfreak said:
The Fed discount rate is the rate the banks pay to the Federal Reserve banks to borrow money for the short term. The Fed Funds rate is the overnight rate charged by the Federal Reserve bank. BOTH are bank to bank.

The money the banks borrow plus interest is owed back to the public via the Federal Reserve banks.
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Umm you ment to say back to the banks who charge the public to use it don't ya ?
 
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