Release Date: April 29, 2009
For immediate release
Information received since the Federal Open Market Committee met in January March indicates that the economy has continuesd to 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 sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, and fixed investment and staffing. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, Although the economic outlook has improved modestly since the March meeting, partly, reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipates 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 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. As previously announced, To provide greater support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Committee Federal Reserve will purchase decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion $1.25 trillion 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 of agency debt by the end of the year. Moreover, to help improve conditions in private credit markets In addition, the Committee decided to purchase will buy up to $300 billion of longer-term Treasury securities by autumn over the next six months . The Committee will continue to evaluate the 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 the Term Asset-Backed Securities Loan Facility to is facilitateing the extension of credit to households and small businesses and supporting the functioning of financial markets through a range of liquidity programs. 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 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.
