The Federal Reserve today announced the following policy
actions:
- The Board of Governors approved a reduction in the discount rate from
5-1/4 percent to 5 percent, effective immediately.
- In a related move, the Federal Open Market Committee agreed that the
reduction would be reflected fully in interest rates in
the reserve markets. This is expected to result in a reduction in the
federal funds rate of 25 basis points, from about 5-1/2
percent to about 5-1/4 percent.
Moderating economic expansion in recent months has reduced potential
inflationary pressures going forward. With price and cost trends
already subdued, a slight easing of monetary policy is consistent with
contained inflation and sustainable growth.
In taking the discount action, the Board approved requests submitted
by the Boards of Directors of the Federal Reserve Banks of New York,
Philadelphia, Cleveland, Atlanta, Minneapolis, and Dallas.
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