Fed has cut the discount rate 50 basis points from 6.25% to 5.75%

The Fed has cut the discount rate 50 basis points from 6.25% to 5.75%. It also said it stands ready to "act as needed" to help the economy. This could go a long way to restoring confidence in the stock market. Stock futures are understandably sharply higher as a result. The discount rate is the rate at which the Federal Reserve lends reserves to banks. The fed funds rate is the rate at which banks lend reserves to each other. By lowering the discount rate, the Fed is making liquidity widely available to the banking system. This goes well beyond any repo operation. The lowering of the discount rate will not have an impact on other market interest rates that a cut in the fed funds rate target would have.