That can be done by making one or two more discount rate only moves, or by raising both rates together with the discount rate going up more.
We now expect a 25-basis-point cut in the Federal funds rate and discount rate on Dec. 11.
We expect profits to rise at a slow rate, but the discount rate to also rise.
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The attractive margins on commercial lending (a gaping three-point spread between the prime rate and the Federal Reserve discount rate) don't alter this gloomy picture.
The Fed even narrowed the penalty banks paid for using discount window money, moving the discount rate closer to the Federal funds rate during the crisis.
The markets are broadly anticipating that the Federal Reserve will lower the fed funds rate, as well as the discount rate, by 25 basis points later this afternoon, and there is little reason to think Wednesday's GDP figure will change that.
However, during unusual periods of reserve shortages in the banking system, the Federal Funds rate would be bid up above the discount rate and trigger borrowing from the Fed.
In the years immediately preceding the latest financial crisis, the Fed worked to restore the discount rate as a penalty rate somewhat higher than the Federal Funds rate.
The Fed's decision means that the discount rate, the interest rate that the Fed charges to make direct loans to banks will be lowered to 5.75 percent from 6.25 percent.
Hence, the Fed entered the crisis with the Federal Funds target rate at 5.25 percent and the discount rate at 6.25 percent.
In addition to cutting the funds rate, the Fed announced it was reducing its discount rate, the interest it charges to make direct loans to banks, by a quarter-point, as well, to 4.75 percent.
If you consider the present Federal Funds rate to be a quarter of a percentage point, the preferred discount rate will be one and a quarter percentage points.
When the Fed reduced the discount rate in September 2007 and left the Federal Funds rate unchanged, it was deliberately increasing the likelihood that banks would shift their borrowing to the Fed and trigger reserve and monetary expansion.
The current discount rate, 3.5%, is significantly higher than the 3% federal funds rate, which is what banks charge each other.
The Fed's next step could be a cut in the fed funds rate, or, a move that hasn't been seen lately, a cut in the discount rate to make it easier for banks to swallow their pride.
Accordingly, a lower liability discount rate means a larger funding gap between plan assets and liabilities.
Currently, we are using a 10-year Treasury bond yield of 6% as a discount rate.
How can you give the banks a three-point spread when Japan's official discount rate is 0.5%?
And raising that discount rate really does lower that social cost of carbon emissions.
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Does the cut in the discount rate mean the Fed has already loosened policy?
The discount rate is the rate that banks use to borrow from the Federal Reserve.
The latest directional change came on Feb. 19, when the Fed raised the discount rate.
Well, you can do what Alan Greenspan did in 2001--drop the discount rate to 1%.
Its first easing move of the crisis was a change in the discount rate.
The controversy surrounding the choice of discount rate used in climate-change economics still rages today.
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Low interest rates reduce the discount rate on corporate earnings and cash flow, raising their present value.
In fact, changes in discount rate expectations account for about 100% of variation across most securities and markets.
The Net Present Value of the two options considered here are calculated using a 6 percent discount rate.
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Cost-benefit analysis (which puts a discount rate on the future, and measures in dollars and cents) is wicked.
The new Hologic ESPP boasts a 15% discount rate and a 6-month offering period with a look back provision.
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