Federal Reserve Cuts Interest Rates to 5 ¾ Percent

The Federal Reserve board has approved a 50 basis point reduction in the primary credit rate, to 5 3/4 percent. The board says this action is intended to narrow the spread between the primary credit rate and the Federal Open Market Committee's (FOMC) target federal funds rate to 50 basis points.

"These changes are designed to provide depositories with greater assurance about the cost and availability of funding," says the announcement from the board.

According to a statement issued by the FOMC, "Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward. In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably."

CLICK HERE to read the Federal Reserve Board discount rate action.

CLICK HERE to read the statement issued by the Federal Open Market Committee.