The Federal Open Market Committee decided today to lower its target
for the federal funds rate 25 basis points to 2 percent.
Recent information indicates that economic activity remains weak.
Household and business spending has been subdued and labor markets
have softened further. Financial markets remain under considerable stress,
and tight credit conditions and the deepening housing contraction are likely
to weigh on economic growth over the next few quarters.
Although readings on core inflation have improved somewhat, energy and
other commodity prices have increased, and some indicators of inflation
expectations have risen in recent months. The Committee expects inflation
to moderate in coming quarters, reflecting a projected leveling-out of energy
and other commodity prices and an easing of pressures on resource utilization.
Still, uncertainty about the inflation outlook remains high. It will be necessary
to continue to monitor inflation developments carefully.
The substantial easing of monetary policy to date, combined with ongoing
measures to foster market liquidity, should help to promote moderate growth
over time and to mitigate risks to economic activity. The Committee will
continue to monitor economic and financial developments and will act as needed
to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman;
Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner;
Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting
against were Richard W. Fisher and Charles I. Plosser, who preferred no change
in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point
decrease in the discount rate to 2-1/4 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, Atlanta, and San Francisco.
http://fx.blogmura.com/fxinfo/
