Fed Cuts Discount Rate to 3.25%

Updated from March 16

Aiming to shore up financial market liquidity, the Federal Reserve Sunday cut the discount rate to 3.25% from 3.50%, effective immediately.

The Fed also said it had extended the maximum maturity of loans it will make to banks at its discount window to 90 days from 30. Historically, the Fed has made these loans overnight or for short periods, but last August policymakers raised the maximum term to 30 days in an effort to deal with the initial market fallout from the subprime meltdown.

Also Sunday, the central bank said it has authorized the New York Fed to create a lending facility to "improve the ability of primary dealers to provide financing to participants in securitization markets." The facility will be available Monday, March 17. ...