April 29, 2009 FOMC Statement

FOMC statement

FOMC statement

For immediate release

Information received since the Federal Open Market Committee met in January March indicates that the economy continues has continued to contract. Job contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, declining equity and lower housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and inventories, fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. investment, and staffing. Although the near-term economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is weak, likely to remain weak for a time. Nonetheless, the Committee anticipates continues to anticipate that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth. growth in a context of price stability.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. 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.

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 As previously announced, to provide greater support to mortgage lending and housing markets, the Committee decided today markets and to increase improve overall conditions in private credit markets, 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 Reserve will purchase a total purchases of these securities to up to $1.25 trillion this year, of agency mortgage-backed securities and up to increase its purchases $200 billion of agency debt this year by up to $100 billion to a total the end of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase year. In addition, the Federal Reserve will buy up to $300 billion of longer-term Treasury securities over by autumn. The Committee will continue to evaluate the next six months. timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve has launched is facilitating the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that supporting the range functioning of eligible collateral for this facility is likely to be expanded to include other financial assets. markets through a range of liquidity programs. 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 the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

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