Federal Discount Rate

MarketWatch  Oct 15  Comment 
Directors at the Minneapolis Fed, in the run-up to the central bank's September monetary policy meeting, urged their colleagues to cut the discount rate, in order to help the economy. The Minneapolis Fed wanted a quarter-percentage point reduction...
Mondo Visione  Sep 19  Comment 
Finansinspektionen (FI) is proposing changes in the method for the extrapolation of the discount rate. The changes are made following comments received from stakeholders during the first consultation. The updated proposal is now being submitted...
The Economist  May 23  Comment 
THERE is a debate over asset bubbles at the moment and having worked through, in disbelief, the dotcom bubble, it is plain that it is extremely hard to call the top. Given publishing timetables, whether Robert Shiller and Andrew Smithers/Stephen...
Mondo Visione  Jun 28  Comment 
At the board meeting June 27, Finansinspektionen (FI) took a decision to introduce a temporary floor on the discount rate, in line with the proposal that was sent out for consultation. READ MORE FI:s decision (in Swedish)
Wall Street Journal  Nov 30  Comment 
After central banks this morning did their Wonder Sextuplets thing and saved the world, it was observed by many that their liquidity pumping efforts would leave US banks paying higher rates to borrow from the Fed than foreign banks would pay to...
Clusterstock  Apr 5  Comment 
Don't get caught with your pants down. The Fed is meeting right now to discuss a possible hike to the discount rate. Here's the announcement from the Fed: -------- It is anticipated that a closed meeting of the Board of Governors of the...
Phil's Favorites  Mar 19  Comment 
Rumours of an Unexpected Fed Discount Rate Hike Dampen Stocks Courtesy of JESSE'S CAFÉ AMÉRICAIN Bloomberg reports that rumours of a surprise Fed Discount Rate hike circulated trading desks earlier today, helping to depress stock...
Clusterstock  Mar 18  Comment 
Go greenback go! The dollar is spiking like crazy right now, and according to ForexLive, the rumor among currency traders is another Fed hike to the discount rate. The discount is a penalty rate, now at 0.50%, above the market rate for Fed...
FX Street  Feb 20  Comment 
The U.S. economy returned back with important fundamentals this week, where data from the housing... For more information, read our latest forex news and reports.
The Times of India  Feb 19  Comment 
A surprise move by the US Federal Reserve to raise one of the key banking system rates, the discount rate, by 25 basis points (100 basis points = 1%) on Thursday night sent jitters through the world market on Friday.




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The discount rate is the interest rate charged to banks by the Federal Reserve. There are actually three different "discount rates" - one for each of the Fed's discount window programs: primary credit, secondary credit, and seasonal credit, each with its own interest rate. However, "the discount rate" usually refers to the interest rate charged for primary credit

Under the primary credit program, loans are extended for a very short term (usually overnight) to depository institutions in generally sound financial condition. Depository institutions that are not eligible for primary credit may apply for secondary credit to meet short-term liquidity needs or to resolve severe financial difficulties. Seasonal credit is extended to relatively small depository institutions that have recurring intra-year fluctuations in funding needs, such as banks in agricultural or seasonal resort communities.

The discount rate charged for primary credit (the primary credit rate) is set above the usual level of short-term market interest rates. The discount rate on secondary credit is above the rate on primary credit. The discount rate for seasonal credit is an average of selected market rates. Discount rates are established by each Reserve Bank's board of directors, subject to the review and determination of the Board of Governors of the Federal Reserve System. The discount rates for the three lending programs are the same across all Reserve Banks except on days around a change in the rate.

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