Fed raises bank loan rate

The US Federal Reserve raised the interest rate on emergency loans to banks to 0.75% from 0.5% last night.

The US Federal Reserve raised the interest rate on emergency loans to banks to 0.75% from 0.5% last night.

The surprise move is seen as the start of an exit strategy for radical measures to jolt the economy from recession.

It comes after two consecutive quarters of positive US economic growth.

The emergency loans to banks, or primary credit, is provided by the central bank as a backup source of funds to banks.

The Fed said its action was part of changes to terms of its so-called discount window lending programmes "in light of continued improvement in financial market conditions".

The Fed made clear the changes "do not signal any change in the outlook for the economy or for monetary policy".

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