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Discount rate is the interest rate at which the Fed loans out its funds to eligible institutions via the discount window. This makes it unlikely for banks or other institutions to make loans at higher rates, therefore effectively setting a ceiling to the federal funds rate.
The discount rate was cut by 50 bp—to 5.75% from 6.25%—and the term of loans was extended from overnight to up to thirty days. That reduced the spread of the primary credit rate over the federal funds rate from 100 basis points to 50 basis points.
It also provided for the creation of a fund to swap safe Treasury securities for less secure ones held by banks. It lastly shaved the difference between the discount rate and the federal funds rate from 50 basis points to 25. Official statement: January 30, 2008 3.00% 3.50% 9–1 Fisher dissented, preferring no change. Official statement
For instance, the prime rate rose to 8.50% in July 2023 just as the target federal funds rate increased to a range of 5.25% to 5.50%. How soon do credit card APRs change after a Fed rate decision?
The fed funds rate began the decade at a target level of 14 percent in January 1980. By the time officials concluded a conference call on Dec. 5, 1980, they hiked the target range by 2 percentage ...
The Federal Reserve cut its federal funds rate by a quarter point today following a two-day policy meeting, bringing its benchmark rate to between 4.25% and 4.50%. This is 2024's third federal ...
Later that month, the Fed reduced the federal funds rate by 0.25%. An additional reduction in October helped the U.S. avoid recession from weakening markets. The Fed lowered rates again in ...
The Fed, which is the central bank of the United States, conducts monetary policy primarily by targeting a certain value for the federal funds rate. If the Fed wishes to move to, for example, a more expansionary monetary policy, it conducts open market operations, which include primarily bank reserves; since this puts more liquidity into the ...