Release Date: December 16, 2008
For immediate release
The Federal Open Market Committee decided today to establish a target
range for the federal funds rate of 0 to 1/4
Since the Committee's last meeting, labor market conditions have
deteriorated, and the available data indicate that
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
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
quantities of agency debt and mortgage-backed
securities to provide support to the mortgage and housing markets, and
stands ready to expand its purchases of agency debt and
mortgage-backed securities as conditions warrant. The Committee
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
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
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
interest rates on required and excess reserve balances of
2008 Monetary Policy Releases