Press Release: US Federal Reserve
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
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.
ENDS