Fed Raises Short-Term and Discount Interest Rates a Quarter Percent
Predictions that the central bank would raise rates proved true as the U.S. Federal Reserve announced on Tuesday quarter-point increases in both the federal-funds target rate and the discount rate. Spokespersons for the Fed say the bank is maintaining its "neutral" bias toward any future rate changes.
Also raised were the federal-funds target rate - or the rate at which banks lend to each other overnight - to 5.25 percent from 5 percent. In a surprise move, it also raised the discount rate, or the rate at which the Fed lends to banks, to 4.75 percent from 4.5 percent.
The increase in the federal-funds rate was the second in two months for the Fed, which is trying to keep inflation at bay in the expanding U.S. economy.
The outlook for the three remaining scheduled Fed meetings in 1999 is clouded. Chairman Alan Greenspan said the central bank is prepared to "act promptly and forcefully" to cool the U.S. economy should it show signs of overheating.
Voice of the Editor
Which isn’t completely true. I mean, occasionally I drop by when I manage to sneak out of the nonstop frat party over at Going Concern, but I’m mostly a wallflower over there. I’m happy to say that I’ve been given express permission (or explicit orders, if you like) to wander over here to AccountingWEB more often.
Why is that, you might ask? My job is to replace the irreplaceable Gail Perry as Editor-in-Chief. What does that mean? I don’t really know! I think it’ll be fun getting a feel for things, throwing in my own thoughts here and there, and listening to the discussions you’re having about the accounting profession.