Post by Rick Warder on Dec 14, 2005 16:28:02 GMT -5
NEW YORK, NY - The Fed announced that it would lower the discount rate from 4.5% to 4.0%, citing that a "measured" decrease would not suffice to kick-start the economy. The strong reduction of the discount rate - bringing about the lowest discount rate since ca. 2004 - will spur investment and borrowing, thus increasing liquidity in the economy. Fed Chairman Ben Bernanke said that "the economy, after growing steadily at a rate between 3-5% over the past seven years, is beginning to slow. This is the time to react with a more accomodative monetary policy in order to ensure that steady growth continues into the future."