The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

Fed Funds Implied Probability

Ben Bernanke says US Monetary Policy is ‘well positioned’; Wachovia fell for second day after ousting CEO Kennedy Thompson; Analysis by Mark Howard, Barclays Capital Head of Credit Analysis.

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on April 29-30, 2008. A summary of economic projections made by Federal Reserve Board members and Reserve Bank presidents for the April 29-30, 2008 meeting is also included as an addendum to these minutes.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. Summaries of economic projections are released on an approximately quarterly schedule. The descriptions of economic and financial conditions contained in the minutes and in the Summary of Economic Projections are based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes and the Summary of Economic Projections can be viewed on the Board’s website at: http://www.federalreserve.gov/monetarypolicy/fomc.htm#calendars.

Minutes of Federal Open Market Committee
April 29-30, 2008: 337 KB PDF | HTML

For release at 2:00 p.m. EDT

The Federal Reserve Board and the Federal Open Market Committee - FOMC on Tuesday released the attached minutes of the Committee meeting held on March 18, 2008, and of the conference call held on March 10, 2008.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.

The FOMC minutes can be viewed on the Board’s website at
http://www.federalreserve.gov/monetarypolicy/fomc.htm#calendars.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 basis points to 2-1/4 percent.

Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened.  Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.

Inflation has been elevated, and some indicators of inflation expectations have risen.  The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization.  Still, uncertainty about the inflation outlook has increased.  It will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh.  Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action at this meeting.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 2-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, and San Francisco.

2008 Monetary Policy Releases

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.

2008 Monetary Policy Releases

With Recession Fears, Feds Cut Interest Rate

The Federal Reserve cuts a key interest rate by three quarters of a percentage point, hoping to stem fears of a recession in the United States. This is the biggest one day move by the central bank in recent memory.

We find it to be really funny how the so called ‘experts’ think that housing woes will be over within the next few months. What actual numbers are they reading?

Don’t let anybody fool you, the housing/mortgage bubble will last well into 2009 and here is why and we will keep it short…

From May 2008 to September 2008 Census data states that we will see about 2 million adjustable rate mortgages that will reset and come due. This is double what we saw in 2007 and we had some serious problems.

All the FHASecure and ‘Interest Rate Freeze’ programs have guidelines that are strict and should only assist approximately 15 to 25% of the affected families. Now add an average of 2 months in reserves that most families have. This takes us to somewhere in the neighborhood of September 2008. The quickest a home can be foreclosed on in some states in 6 months, like California and the longest is about 18 months like New York, so lets say an average of nine months to foreclose. Now we are at June of 2009! After 3 consecutive years of this foreclosure and depreciating home value problem, who is going to buy then?

We feel that the first time the national real estate market will flatten on an overall average will be during the 2010 buying season

Federal Reserve Panel Voiced Foreclosure Concern

Members of the Federal Reserve monetary policy committee are concerned that rising foreclosures and the huge supply of unsold homes on the market could put additional downward pressure on house prices and lead to “further disruptions in the financial markets.”

The minutes of the Dec. 11 Federal Open Market Committee also reveal that members did not expect that the housing market would continue to deteriorate after their last meeting on Oct. 31 or that the reduced availability of jumbo mortgages would last so long.

The FOMC members “agreed that the housing correction was likely to be both deeper and more prolonged than they had anticipated in October,” the Dec. 11 minutes say. The committee voted to lower the target federal funds rate 25 basis points to 4.25%.

Boston Federal Reserve Bank president Eric Rosengren advocated a more aggressive cut due to a “deteriorating housing sector, slowing consumer and business spending, high energy prices, and ill functioning financial markets.”

The Federal Reserve Board and the Federal Open Market Committee on Wednesday released the attached minutes of the Committee meeting held on December 11, 2007 and of a conference call held on December 6, 2007.

The minutes for each regularly scheduled meeting of the Committee ordinarily are made available three weeks after the day of the policy decision and subsequently are published in the Board’s Annual Report. The summary description of economic and financial conditions contained in these minutes is based solely on the information that was available to the Committee at the time of the meeting.

FOMC minutes can be viewed on the Board’s web site at www.federalreserve.gov/fomc.

Minutes of Federal Open Market Committee, December 6 and 11, 2007 (121 KB PDF)

2008 Monetary Policy Releases