Fed Raises Interest Rate Charged to Banks In First Move Since 2008

20 02 2010

The Federal Reserve, taking its first step to return lending to normal after more than two years of extraordinary actions to prop up the economy, on Thursday raised its discount rate — the interest rate it charges on emergency loans to banks — by one-quarter percentage point.

The increase, to 0.75 percent from 0.50 percent, takes effect on Friday.

Officials said the move was not meant to be a broad tightening of credit. Rather, they said, it was intended to discourage emergency borrowing when other financing is available to banks.
The discount rate had been at 0.50 percent since December 2008.

Source: New York Times

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