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Article: Fed Increases Two Key Interest Rates; Central Bank Signals Pause; Markets Surge
- Article from:
- The Washington Post
- Article date:
- May 18, 1994
- Author:
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The Federal Reserve raised two key interest rates a half
percentage point each yesterday to make sure inflation stays under
control, while signaling that the rapid increase in rates is not
likely to continue.
In a statement, the Fed said its actions were "designed to
maintain favorable trends in inflation and thereby sustain the
economic expansion."
The Fed raised the discount rate, the rate the central bank
charges on loans to financial institutions, from 3 percent to 3.5
percent, and lifted its target for the federal funds rate, the rate
financial institutions pay one another on overnight loans, from 3.75
percent to 4.25 percent.
The financial markets reacted favorably, as the Dow ...