On November 6, the Federal Open Market Committee lowered its target for the federal funds rate by 50 basis points (bp) to 1.25%. In a related action, the Board of Governors lowered the discount rate 50 bp to 0.75%. The magnitudes of the moves surprised markets. Although the fed funds futures market had priced in a rate cut, the implied yield indicated an expectation of a 25 bp change in November, with a possible further cut sometime later.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-12, pp. 04, 12.01.2002.