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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: Scooter who wrote (54929)	8/24/1999 2:33:00 PM
From: Dolfan	Respond to of 90042

Here it is Market loves it! Fed boosts key rate again Committee raises fed funds, discount rate by quarter point to cool growth By Staff Writer M. Corey Goldman August 24, 1999: 2:21 p.m. ET NEW YORK (CNNfn) - In a widely anticipated move, the Federal Reserve raised its key short-term interest rates by a quarter point Tuesday, as the central bank sought to slow the resilient U.S. economy and keep inflation under control. At the same time, the policy-making Federal Open Market Committee announced its decision to keep its bias toward future rate actions neutral, hinting that another rate move isn't imminent. The Fed raised its so-called fed funds rate -- the target rate that commercial banks lend to each other overnight -- to 5.25 percent. It was the second quarter-point increase in the rate in two months. The less-tinkered-with discount rate -- the rate at which the Fed's 12 district banks lend directly to financial institutions -- was raised to 4.75 percent from 4.5 percent. It was the first time since April 1994 that the Fed opted to raise the fed funds rate at two consecutive Open Market Committee meetings. The increase comes in the wake of economic reports showing strong U.S. growth, but little actual evidence of inflation -- the nemesis of the stock and bond markets. At its June 30 meeting, the Fed announced it was raising the federal funds rate by a quarter percentage point, but also adopted a neutral stance on future rates. "The Fed is on a pre-emptive policy course and wants to take back part, if not all of the easings from last year," Ryan Brecht, an analyst with Standard & Poor's MMS, said prior to the announcement. Evidence of low inflation "may have soothed the worst of the market's Fed fears and may help leave the FOMC sidelined in October." In September 1998, the Fed embarked on a series of interest rate reductions designed to propel U.S. growth in the face of economic turmoil overseas. It reduced the fed funds rate three times to 4.75 percent from 5.5 percent and the discount rate to 4.5 percent from 5 percent.