A week later, the Fed held an emergency meeting to cut its "discount rate" â¿¿ the rate it charges on emergency loans to banks. Then in September, the Fed cut its key short-term interest rate for the first time since 2003 by one-half percentage point from 5.25 percent to 4.75 percent. The goal was to help ease loan rates throughout the economy. The Fed would cut the rate two more times in 2007 as the financial crisis worsened, leaving its target for short-term interest at 4.25 percent at the end of the year.By the October meeting, Fed members expressed some relief that the crisis appeared to be contained, at least for the time being. Fed officials cited more stability in financial markets and solid growth in the July-September quarter for this belief.
Transcripts Show Fed Underestimated Crisis In 2007
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