The Federal Reserve Board on Tuesday (August 21) announced its approval of the proposal by Wells Fargo & Company, San Francisco, to acquire Greater Bay Bancorp, East Palo Alto, and thereby indirectly acquire its subsidiary, Greater Bay Bank, National Association, Palo Alto, all of California.

In order to stabilize the markets U.S. Federal Reserve unexpectedly cut the discount rates by half a percent sending stocks to rally in early trading.

The Federal Open Market Committee decided on June 28 to keep its target for the federal funds rate at 5-1/4 percent.

The Federal Reserve, saying that inflation remains its “predominant policy concern,” left its benchmark interest rate unchanged at 5.25 percent on Thursday and signaled that it would keep it at that level for some time, The New York Times reported.

The Federal Reserve is taking into account several measures, such as proof of income from borrowers, no penalties for early mortgage payments, and a guarantee that property taxes and insurance bills are covered to recover high-risk mortgages market.

Economic growth in the United States has slowed in recent quarters, reflecting in part the economy's transition from the rapid rate of expansion experienced over the preceding years to a more sustainable pace of growth. Real gross domestic product (GDP) rose at an annual rate of roughly 2 percent in the second half of 2006 and appears to be expanding at a similar rate early this year.

U.S. Federal Reserve Chairman Ben Bernanke and his colleagues are still worried about inflation, even while hinting that an interest rate cut may be needed to help boost a weak economy.

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5.25%.