Here is the Policy Statement...Analysis Coming....DOWN IN COUPON BUYING...REPRICES FOR BETTER ON WAY
The Federal Open Market Committee decided today to establish a target range
for the federal funds rate of 0 to 1/4 percent.
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.