The Federal Reserve is considering new steps to make liquidity more readily available to financial institutions, in the hope of easing strains in the money market.

Analysts close to the Fed believe that a cut in the rate at which it lends directly to banks and steps to reduce the stigma associated with such borrowing are under active consideration. They believe the Fed could an-nounce plans to cut the discount rate at which it lends directly to banks by 25 basis points to 4.75 per cent.