March 17–18, 2009 FOMC Minutes

Our reading

The minutes are consistent with the statement because both documents describe a deteriorating economy with widespread declines in consumer spending, business investment, exports, and employment, alongside subdued inflation risks, and they outline the same policy response—maintaining the federal funds rate at 0 to 1/4 percent, purchasing up to $750 billion in agency MBS, $100 billion in agency debt, and $300 billion in longer-term Treasury securities, and expanding the TALF—with the minutes providing detailed discussion and rationale that mirror the statement's summary.

FOMC minutes

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments."

Voting for this action: Messrs. Bernanke and Dudley, Ms. Duke, Messrs. Evans, Kohn, Lacker, Lockhart, Tarullo, and Warsh, and Ms. Yellen.

Voting against this action: None.

It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, April 28-29, 2009. The meeting adjourned at 1:35 p.m. on March 18, 2009.