Fed Interest Rate
One of Federal Reserve Bank’s roles is to lessen financial crises by acting as a lender of last resort. The Fed is supposed to stand ready to provide fresh reserves to banks in need of cash. This lending is done through the discount window. The interest rate that the Fed charges banks for these reserves is called the discount rate. This is the only rate the Fed sets. The discount rate is not as important as the Fed rate because very few banks got to the Fed to borrow money. The only case that a bank would go to the Fed is when its about to collapse and it’s the last resort. B . . .
Expansion will now heavily depend on consumer confident as an ultimate factor. Data has showed that consumer spending is active so there is no need to panic yet. By doing so, the Fed is trying to keep the U. If consumers tighten their spending, then our economy will dive into recession. At the start of the year the rate was at 6. When he makes cuts, he is changing the target and signaling where monetary policy is headed. S economy from tipping into recession. On the other hand it can also mean that the economy already has had as much bang as possible by the lowering of the rates. This tells us that consumer spending is a key player in where the economy will be heading. When Greenspan makes another rate cut, he is actually lowering the Federal Fund target, and this causes short term rates to fall. The last rate cut was a quarter of a point that followed 5 consecutive half-point reductions. Another factor that is giving Greenspan hope, is the sign of stability in consumer sentiment and confidence. The Fed has cut the rate 6 times thus far.
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Federal Fund, Reserve Banks, , fed trying, rate fed, rate cut, consumer spending, discount rate, borrow money, |
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