This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Fed Cuts Discount Rate

Updated from 8:59 a.m. EDT

The Federal Reserve reduced the rate it charges banks who want to borrow from it, saying financial market conditions have deteriorated, and tighter credit and increased uncertainty have the potential to hinder economic growth.

By lowering the discount rate by 50 basis points Friday, rates will go to 5.75% from 6.25%.

With the cut, the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate is now 50 basis points. The fed funds rate, the rate banks use to charge each other interest on overnight loans, was unchanged at 5.25%.

Some investment banks, including Lehman Brothers (LEH) and Goldman Sachs (GS - Get Report), are now expecting the Fed to lower the fed funds target.

The Fed has added billions of dollars in liquidity to the system in recent days, including $17 billion on Thursday, but it had yet to take any action on rates. Markets worldwide have slumped lately as worries about access to credit, stemming from a seize-up in the mortgage sector, have spread.

Names like Countrywide (CFC), KKR Financial Holdings (KFN) and Thornburg Mortgage (TMA) are among the U.S. stocks that have been hit hard at least once this week as investors grew increasingly jittery about the companies' financial health.

Because of the current situation, "although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KFN $0.00 0.00%
GS $166.18 1.26%
AAPL $93.64 -0.11%
FB $118.57 0.84%
GOOG $698.21 0.75%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs