Friday, February 19, 2010

Interest Rates Up

The Fed raised the discount rate today.

The discount rate is the one for emergency borrowing by member banks, not one that is tightly related to the rates consumers pay.

Even so, this is a sign that they think financial institutions are on the mend.

One thing to keep in mind is that the Fed tends to raise and lower interest rates in a sequence of baby steps. So we are probably in for a few years of rates being steadily bumped up.

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