Friday, February 19, 2010

Federal Reserve Hikes Discount Rate For First Time Since 2008

Feather News

The U.S. Federal Reserve announced yesterday that it will raise the discount rate from a half a percent to .75 percent, the first increase since 2008.

Despite statements that today´s rate increase announcement should not be seen as the beginning of a cycle of rate increases, the financial markets took it that way.

A Federal Bank statement said, "The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy."

St. Louis Federal Reserve Bank President James Bullard discounts said market expectations that the Fed would hike rates this year are "overblown" and that rate increases in 2011 are much more likely.