Federal Reserve Rate Cut: What Does It Mean?

The country's top monetary policymakers took a somewhat unusual step in trimming the discount rate. We explain what it does -- and doesn't mean.

The Federal Reserve's move to cut a half-point from the discount rate will go some distance in soothing financial markets roiled by problems in housing and subprime mortgages. But the Fed's move is significant not only for what it did, but also for what it didn't do -- cutting the federal funds rate, which has a direct impact on interest rates paid by businesses and individuals. To help you decipher what's going on, we've put together some questions and answers.