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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (37551)1/4/2001 11:15:55 PM
From: TigerPaw  Respond to of 54805
 
Another rate cut after the bell today. A minor one, a 1/4 on the discount rate, but the Fed must be scared to death to do it this soon.

The explanation that I heard is that the discount rate is only lowered in response to a request from the Federal Reserve Banks. Clued in that Greenspan wanted a rate cut they put in their request ... for 1/4. They too were suprised by the 1/2 point cut. Normally these rates are moved together and Greenspan specificly said he reserved another 1/4 point which he would change at the request of the Reserve. They requested, he complied. It was strictly to keep the various rates in sync.

TP



To: LindyBill who wrote (37551)1/5/2001 1:47:57 AM
From: kumar  Read Replies (1) | Respond to of 54805
 
re : Discount Rate cuts :

from what I hear "no big deal" :

- Fed Funds rate cuts/increases is what banks charge each other overnight.
-discount rate is what a bank would pay if funds were borrowed from the Fed overnight.
- Fed needs a request from "regional Feds" (not sure of terminology here), to go beyond 1/4 cut/raise unilaterally.
- Today a request was made, and accepted.

cheers, kumar


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