The U.S. Federal Reserve said Friday it has approved a half-percentage point cut in its discount rate on loans to banks to "promote the restoration of orderly conditions in financial markets."
The decision means the discount rate, the interest rate that the central bank charges to make direct loans to banks, will be lowered to 5.75 percent from 6.25 percent.
This is the Fed's new effort to restore calm to financial markets which have been roiled recently by a widening credit crisis triggered by the U.S. subprime market.
Since Aug. 9, the Fed has added a total of 88 billion U.S. dollars to the banking system to increase liquidity.
But the Fed did not change its target for the more important federal funds rate, the interest commercial banks charge each other on overnight loans. The benchmark interest rate has remained at 5.25 percent for more than a year.
Source: Xinhua
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