Fed cuts loan rate to banks by half percent

Section:

By Martin Crutsinger
Associated Press
via Yahoo News
Friday, August 17, 2007

http://news.yahoo.com/s/ap/20070817/ap_on_bi_ge/fed_interest_rates;_ylt=...

WASHINGTON -- The Federal Reserve, declaring that increased economic uncertainty poses risks for U.S. business growth, announced Friday that it has approved a half-percentage point cut in its discount rate on loans to banks.

The action was the most dramatic effort yet by the central bank to restore calm to global financial markets which have been roiled in the past week by a widening credit crisis.

The decision means that the discount rate, the interest rate that the Fed charges to make direct loans to banks, will be lowered to 5.75 percent, down from 6.25 percent.

The Fed did not change its target for the more important federal funds rate, which has remained at 5.25 percent for more than a year.

However, it has been infusing billions of dollars in money into the banking system over the past week to keep that rate from rising above the target level.

Many economists believe if the financial market crisis worsens the Fed will soon move to cut the federal funds rate as well.

* * *

Join GATA at these conferences:

The Silver Summit
Thursday-Friday, September 20-21, 2007
Coeur d'Alene, Idaho
http://thesilversummit.com

New Orleans Investment Conference
Sunday-Thursday, October 21-25, 2007
New Orleans, Louisiana
http://www.neworleansconference.com

* * *

Help Keep GATA Going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at http://www.gata.org/.

GATA is grateful for financial contributions, which are federally tax-deductible in the United States.