The Federal Reserve today announced the following policy
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.
- 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.
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.