Circular
Target for Federal Funds Rate Lowered by 50 Basis Points
January 31, 2001
Circular No. 11317

Discount Rate Reduced by 50 Basis Points

To All Depository Institutions in the Second Federal Reserve District:

At its meeting today, the Federal Open Market Committee decided to lower its target for the federal funds rate by 50 basis points, to 5½ percent. In addition, the Board of Governors of the Federal Reserve System approved a 50-basis-point reduction in the discount rate, to 5 percent.

The announcement indicated that "consumer and business confidence has eroded further, exacerbated by rising energy costs that continue to drain consumer purchasing power and press on business profit margins."