Another Rate Cut & More Liquidity Issues

The Federal Open Market Committee (FOMC) reduced the target federal funds rate another 25 basis points to 2% on Wednesday. 

Dallas Federal Reserve Bank President Richard Fisher and Philadelphia Federal Reserve Bank Charles Prosser opposed this rate cut.

Link to FOMC Statement:  http://www.federalreserve.gov/newsevents/press/monetary/20080430a.htm

The Federal Reserve continues to battle the liquidity crunch in other ways as well.  Today, the Federal Reserve announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility (TAF) from $50 billion to $75 billion, beginning with the auction on May 5. This increase will bring the amounts outstanding under the TAF to $150 billion.  In response to the global nature of the liquidity crisis, the Swiss National Bank and the European Central Bank are working in cooperation with the Federal Reserve.

Link:  http://www.federalreserve.gov/newsevents/press/monetary/20080502a.htm

(ag) May 2, 2008, in Economy/Interest Rates