Fed Raises Its Discount Rate to 8.5%: Year's 6th Increase Sets a ...
Reacting strongly to persistent high inflation and the weak dollar, the Federal Reserve Board yesterday raised its discount rate to a record 8.5 percent.</br></br>It was the sixth increase this year in the rate the nationÛªs central bank charges its member banks for loans.</br></br>Analysts said the increase signals further moves by the Federal Reserve to raise other interest rates in its fight against inflation.</br></br>The Fed action came as many of the nationÛªs major banks were raising their prime rates to 10 percent. This is the interest they charge their best corporate borrowers for short-term loans.</br></br>It also came shortly after an unexpected spurt in food price inflation in September. Food prices, which rose sharply in the first six months of the year, nad declined in July and August.