NEW YORK — The stock exchanges have rebounded sharply from their previous doldrums as the Federal Reserve cut its discount rate to 5.75%.
The Board approved a 50 basis point reduction in the primary credit rate to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points, the Fed said in a prepared statement.
In another statement the Fed acknowledged that current conditions in the credit markets had forced the move.
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"Financial market conditions have deteriorated, and tighter credit conditions and increased uncertainty have the potential to restrain economic growth going forward," the Fed said. "In these circumstances, although recent data suggest that the economy has continued to expand at a moderate pace, the Federal Open Market Committee judges that the downside risks to growth have increased appreciably."
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