The US Fed has called an
unscheduled meeting on Monday. As in,
tomorrow. They announced this Friday,
and nobody really knows what they are meeting about. The announced reason is review of the advance
and discount rates – presumably leading to some change. (Why have an emergency meeting to leave
things more or less the same?) This
could be a really big deal. The Fed
doesn’t often call unscheduled meetings.
Advance rate: the size of
the haircut applied to collateral (i.e. bonds) that banks who want to borrow
money from the Fed.
Discount rate: interest
rate charged on Fed-supplied loans.
Note there is also the Fed
Funds Rate (which is a target set by the Fed and enforced by Fed open market
operations), as well as the interest rate paid on Excess Reserves on deposit at
the Fed.
