Tuesday, October 7, 2008
“Absolutely, it’s a stealth easing,”
Oct. 7 (Bloomberg) -- The Federal Reserve may have trimmed borrowing costs yesterday without actually saying so. The central bank used power granted under last week's financial-rescue legislation to effectively set a floor under its main interest rate that's lower than the 2 percent target set by policy makers last month. The Fed may now pay interest on bank reserves while it floods financial markets with liquidity, pushing down the overnight lending rate by about 0.75 percentage point to 1.25 percent.