The U.S. Federal Reserve cut the discount rate by 25 basis points from 3.5 percent to 3.25 percent effective immediately.
Federal Reserve
The Federal Reserve headquarters in Washington, DC.
The cut comes before a likely cut in overall interest rates at FOMC meeting this week, with some tipping of a cut of up to 100 bps.
The U.S. dollar edged against the yen and euro higher on the news, but the Fed cut is unlikely to offer major solace for risk-averse markets as previous liquidity steps haven't achieved much.
The Fed also announced new a lending facility for primary dealers and said that primary credit loans would be extended to 90 days from 30 days. The facility will be in place for at least six months and may be extended as conditions warrant.
The Fed in a statement said liquid, well-functioning markets were essential to promoting growth.
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