Fed Cuts Discount Rate from 3.5% to 3.25%

 

Right after the JPMorgan / Bear Stearns deal, the Fed has cut the discount rate, the rate it lends to banks normally overnight, from 3.5% to 3.25%, now bringing it within 25 basis points of the funds rate, currently at 3%. Remember that the FOMC meets this Tuesday as well with the markets potentially pricing in a cut from 50 basis points to up to 75 basis points.