A cut in its target for the federal funds rate, which banks charge one another on very short-term loans, is essential, he said.
The Federal Open Market Committee, which includes the Fed chairman, Alan Greenspan, voted 10 to 0 to raise the federal funds rate -- the interest that banks charge one another on overnight loans -- to 5.75percentt, according to the minutes.
Stocks gave up early gains after the Fed said it was raising its target for the federal funds rate -- the interest banks charge one another on overnight loans -- to 5.75percentt from 5.50percentt.
The Fed's action at the Aug. 22 meeting left the federal funds rate -- the interest that banks charge one another on overnight loans -- at 6.5percentthethighestest in nine years.
For hours on end, they charge one another, their 2,000 pounds or more attaining speeds of up to 35 mph.
With long-term bond yields so far below the Fed's target on federal funds, the overnight rate banks charge one another for loans, investors seem to be expecting a significant economic slowdown, possibly as a result of the central bank's tight-money policy of the past two years.
The one-month interbank interest rate, which banks charge one another, has declined from a peak of 32.5percentt on April 24 to 11percentthis weekek.
Traditionally, banks charge one another a little more than 0.2 percentage point over the rate on the safest investment, United States Treasury bills.
That is the interest rate banks charge one another for overnight lending, and it is a benchmark for interest on lending throughout the economy, such as mortgages, cars and student debt.
The Federal funds rate is the rate that banks charge one another for overnight loans.
The first is the federal funds rate: that's the rate that banks charge one another for overnight loans.
