US Fed cuts bank lending rate

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The US Federal Reserve has moved to ease the current stock market crisis by cutting the rate it lends money to banks to 5.75% from 6.25%.

The 50 basis point cut will make it simpler for banks to borrow money from each other, while generally boosting the amount of funds in the sector. "These changes are designed to provide depositories with greater assurance about the cost and availability funding," a Fed statement said. The bank rate is different to the federal funds rate, which stays at 5.25%. Williams de Broë economist Jim Wood Smith says the rate drop and the accompanying statement reads like a terminal disease diagnosis. “We can take this one of two ways, either a major bank is in big trouble or else this is the ...

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