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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: J.T. who wrote (5884)1/3/2001 1:34:41 PM
From: J.T.  Read Replies (2) of 19219
 
Fed Cuts Overnight Bank Rate to 6%; Cites Slowing Economy
from Bloomberg

By Noam Neusner and Vincent Del Giudice

Washington, Jan. 3 (Bloomberg) -- Federal Reserve policy- makers surprised investors by lowering the overnight bank lending rate a half-percentage point today, in advance of their next scheduled meeting, citing ``further weakening'' of sales and production.

The Fed cut the overnight bank rate to 6 percent, the first rate cut by the Fed in two years. On Dec. 19, the Fed's Open Market Committee voted to hold rates steady, and, citing the risk of further economic weakness, said in a statement it ``will continue to monitor closely the evolving economic situation.''

The Fed's Board of Governors also voted to cut the discount rate on loans to banks from the Fed system by a quarter percentage point to 5.75 percent. Although few banks borrow directly from the Fed to meet their cash reserve requirements, the central bank generally keeps the discount rate within 50 basis points of the overnight bank rate.

The Fed ``stands ready to cut discount rate another 25 basis points,'' it said.

Most investors had been betting that the Fed would hold off on cutting rates until its Jan. 30-31 meeting, and follow that with another rate cut by April.


Best Regards, J.T.
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