The Federal Open Market Committee
decided today to establish a target
range for the federal funds rate of 0 to
1/4 percent.
decided today to establish a target
range for the federal funds rate of 0 to
1/4 percent.
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Since the Committee's last meeting, labor market conditions have
deteriorated, and the available data indicate that consumer spending,
business investment, and industrial production have declined.
Financial markets remain quite strained and credit conditions tight.
Overall, the outlook for economic activity has weakened further.
Meanwhile, inflationary pressures have diminished appreciably. In
light of the declines in the prices of energy and other commodities
and the weaker prospects for economic activity, the Committee
expects inflation to moderate further in coming quarters.
The Federal Reserve will employ all available tools to promote the
resumption of sustainable economic growth and to preserve price
stability. In particular, the Committee anticipates that weak economic
conditions are likely to warrant exceptionally low levels of the federal
funds rate for some time.
The focus of the Committee's policy going forward will be to support
the functioning of financial markets and stimulate the economy
through open market operations and other measures that sustain
the size of the Federal Reserve's balance sheet at a high level. As
previously announced, over the next few quarters the Federal
Reserve will purchase large quantities of agency debt and
mortgage-backed securities to provide support to the mortgage and
housing markets, and it stands ready to expand its purchases of
agency debt and mortgage-backed securities as conditions warrant.
The Committee is also evaluating the potential benefits of purchasing
longer-term Treasury securities. Early next year, the Federal
Reserve will also implement the Term Asset-Backed Securities Loan
Facility to facilitate the extension of credit to households and small
businesses. The Federal Reserve will continue to consider ways of
using its balance sheet to further support credit markets and
economic activity.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W.
Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto;
Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a
75-basis-point decrease in the discount rate to 1/2 percent. In
taking this action, the Board approved the requests submitted by
the Boards of Directors of the Federal Reserve Banks of New York,
Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The
Board also established interest rates on required and excess reserve
balances of 1/4 percent.
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