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Federal Reserve Chairman Ben S. Bernanke signaled policy makers are ready to lower interest rates as the credit freeze worsens the outlook for U.S. economic growth and as inflation concerns wane.
Policy makers aren't scheduled to meet to consider changes to their benchmark lending rate of 2 percent until Oct. 28-29, and some analysts predict they will cut borrowing costs before then.
Bernanke has pushed the limits of the Fed's powers to create an array of unprecedented lending programs as the credit crisis spread from banks to securities firms, mutual funds, the biggest U.S. insurer and now corporate America.
Over the past week the Fed announced plans to pump an additional $1 trillion into the global financial system through auctions of cash loans to banks. That's on top of the central bank's $147 billion in loans to Wall Street bond dealers and $152 billion in lending to backstop money market mutual funds as of Oct. 1.
The Treasury Department is making a deposit with the Fed's special purpose vehicle that is substantial, Fed staff officials said today. The funds won't come from the $700 billion rescue plan authorized by Congress last week, under which the Treasury will purchase distressed debt such as mortgage-backed securities. The Treasury program should, ``with time,'' help make credit flow and revive economic growth, Bernanke said today.
Originally posted by redhatty
Okay, someone please tell me where is all this money coming from? If the Fed had a Trillion to "pump" into the market, why did congress have to approve $700 Billion?