1/4 point discount cut and more liquidity added
Federal Reserve Cuts Interest Rate 25 Bps, Creates Lending Facility
3/16/2008 7:26:07 PM The Federal Reserve took two steps Sunday to bolster market liquidity and bring order to financial markets ahead of Monday's Wall Street open.
The Fed announced an immediate 25-basis point reduction in its benchmark credit rate, dropping the rate to 3.25 percent. The board also approved an increase in the maximum maturity of primary credit loans from 90 days from 30 days.
In addition, the Fed board voted unanimously to authorize the Federal Reserve Bank of New York to create a “lending facility” to improve the ability of primary dealers to provide financing to securitized markets. The facility becomes available at the open of business on Monday, March 17.
The Fed says the facility will be in place for at least six months, and may be extended if conditions warrant.
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