Fed Funds rate already @ 4.75%

Discussion in 'Economics' started by The Kin2, Aug 19, 2007.

  1. Yeah, I wonder about that. There's no legal requirement for them to announce the rate. They can just do it, and before Greenspan, they did.
    It could be that the Sept meeting will just ratify their new policy, although I don't think they'll go all the way back to 4.75 officially. They'll probably say they're targetting 5.
    In the really old old days, the discount rate was what everyone followed, because everyone understood that the FF target could be changed daily, even, with no real need to tell anyone. They used to make you guess about whether they had changed the FF target.
    But they do have to inform the banks of movement on the discount rate. So even though it is largely symbolic, cutting the discount rate does send a strong message about where the Fed is going.