Over the weekend, the U.S. Federal Reserve reduced its primary lending rate to financial institutions from 3.5 percent to 3.25 percent. The rate cut, made on Sunday, was part of a one-two punch delivered by America’s central bank to beat back liquidity problems in the market, and reduce the negative impacts of the ongoing U.S. credit crisis.
The Fed also authorized a lending facility for primary dealers — which are essentially large investment banks — to bolster the securitization market. The new facility will allow banks to continue to lend into that market, and is available on Monday. See the Fed’s statement here.Related