Posted on 02/18/2010 1:39:50 PM PST by TSgt
Edited on 02/18/2010 1:48:02 PM PST by Admin Moderator. [history]
The Federal Reserve on Thursday raised its discount rate to 0.75% from 0.5%, an effort to return its lending facilities to more normalized levels.
The Fed said the move, along with other recent modifications to its credit programs, does not signal a change in its outlook for the economy or for monetary policy, and the more important fed funds rate remains in its range of 0% to 0.25%.
The Fed usually changes the discount rate at the same time it does the fed funds rate, but after the unprecedented steps taken to combat the financial crisis, the Fed is eager to start bringing rates back to more traditional levels, and Thursday’s move is a start.
It rose to 0.75%.
The same thing is occurring accross the industry. Oh, and in many cases it’s lack of loan demand that is causing loan balances to fall. Banks want to lend; it’s how they make money. Unfortunately for banks there are few credit worthy borrowers looking to add to debt right now.
The 16% inflation rate you heard was based upon annualizing the January inflation rate.
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