Urgently trying to keep cash flowing amid a Wall Street meltdown, the Federal Reserve on Tuesday pumped $50 billion into the nation's financial system to help ease credit stresses.
The Federal Reserve Bank of New York's action comes in addition to its regular market operations to inject $20 billion into the system slated for the day.
The maneuver takes place as Federal Reserve Chairman Ben Bernanke and his central bank colleagues prepare to meet to decide their next move on interest rates and conduct a fresh assessment of the country's financial and economic troubles.
Some believe the financial system turmoil raises the odds the Fed will cut rates. Others still predict the Fed will hold its key rate steady at 2 percent.
If the Fed were to cut its benchmark rate, the prime lending rate for millions of consumers and businesses -- currently at 5 percent -- would drop by a corresponding amount. The prime rate applies to certain credit cards, home equity lines of credit and other loans. The Fed's key rate and the prime rate are at four-year lows.
Even if the Fed doesn't lower rates, analysts think the central bank could switch signals and suggest it could cut rates sooner down the road.
(CBS2 HD / WNBC.com)
http://www.theyeshivaworld.com/article.php?p=23573
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