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Release Date: January 31, 1996

For immediate release
The Federal Reserve today announced the following policy actions:
The Board of Governors approved a reduction in the discount rate from 5-1/4 percent
to 5 percent, effective immediately.
In a related move, the Federal Open Market Committee agreed that the reduction
would be reflected fully in interest rates in the reserve markets. This is expected to
result in a reduction in the federal funds rate of 25 basis points, from about 5-1/2
percent to about 5-1/4 percent.
Moderating economic expansion in recent months has reduced potential inflationary
pressures going forward. With price and cost trends already subdued, a slight easing of
monetary policy is consistent with contained inflation and sustainable growth.
In taking the discount action, the Board approved requests submitted by the Boards of
Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Atlanta,
Minneapolis, and Dallas.
1996 Monetary policy

Last update: March 16, 2001


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102