Fed’s Interest Rate Cut
Greenspan’s Strategy to Beat off Recession
Monday, January 8, 2001
In the New Year, the US Federal Reserve suddenly lowered its interest rate by 50 base points to 6 percent. The objective: to stave off an impending recession. Like the rest of the world, Indonesia will not escape the effects.
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Once again, Alan Greenspan caused a stir at New Year. Without any warning, he suddenly cut the Federal Fund interest rate from 6.5 percent to 6 percent, the key interest rate affecting loans to meet banks’ reserve requirements. The US Federal Reserve chairman did not stop there. Last Wednesday he also lowered the discount rate, the interest rate for central bank loans to banks, from 25 basis points to 5.75 percent. A day after that the Fed
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