FOMC statement of January 28, 2009
This statement of the Federal Open Market Committee, compared sentence by sentence with the scheduled statement before it: what changed in the text, and how the Committee voted.
In short
The Federal Open Market Committee released this statement on January 28, 2009. Compared with the previous scheduled statement of December 16, 2008: 5 sentences changed, 10 were added, 10 were removed, and 1 stayed the same. In words: 283 added, 205 removed. The vote on this statement: 1 member voted against: Jeffrey M. Lacker. On the December 16, 2008 statement: Unanimous.
FOMC statement · January 28, 2009
Changed sentences against the previous scheduled statement (December 16, 2008)
1 unchanged · 5 changed · 10 added · 10 removed · words +283 / −205
- December 16, 2008
- Unanimous.
- January 28, 2009
- 1 member voted against: Jeffrey M. Lacker.
The Federal Open Market Committee decided today to establish a keep its target range for the federal funds rate of at 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.
The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
Information received since the Committee met in December suggests that the economy has weakened further.
Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending.
Furthermore, global demand appears to be slowing significantly.
Conditions in some financial markets have improved, in part reflecting government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit conditions for households and firms remain extremely tight.
The Committee anticipates that a gradual recovery in economic activity will begin later this year, but the downside risks to that outlook are significant.
In light of the declines in the prices of energy and other commodities in recent months and the weaker prospects for considerable economic activity slack, the Committee expects that inflation to moderate further pressures will remain subdued in coming quarters.
In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.
The focus of the Committee's policy going forward will be is to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain are likely to keep 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 continues to 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 the quantity of such purchases and the duration of agency debt and mortgage-backed securities the purchase program as conditions warrant.
The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.
The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.
Early next year, The Federal Reserve will also implement be implementing 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.
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.
The Committee will continue to monitor carefully the size and composition of the Federal Reserve's balance sheet in light of evolving financial market developments and to assess whether expansions of or modifications to lending facilities would serve to further support credit markets and economic activity and help to preserve price stability.
Voting against was Jeffrey M. Lacker, who preferred to expand the monetary base at this time by purchasing U.S. Treasury securities rather than through targeted credit programs.
Show the unchanged sentence
The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.
Source: Board of Governors of the Federal Reserve System — the statement on federalreserve.gov · December 16, 2008
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