巴菲
新手上路
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- 2004-01-18
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The U.S. Federal Reserve has decided to slash the federal funds rate target by up to a full percentage point to an unprecedented low, with the benchmark overnight interest rate to range between zero per cent to 0.25 per cent.
The Federal Open Market Committee's move was a surprise to analysts who had predicted the still-low rate of 0.5 per cent, which would have been a cut of 50 basis points from the one-per-cent target announced in October.
"Labour market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined," read the FOMC's statement. "Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further."
The central bank added that inflation is expected to fall further as the price of energy and other commodities continue to drop.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the statement read, with the committee indicating that the federal funds rate would remain at "exceptionally low levels" for some time.
Besides the dramatic cut, the committee said it was prepared, if needed, to expand its previously announced purchases of agency debt and mortgage-backed securities to provide support to the ailing U.S. housing and mortgage markets, and that it was considering buying longer-term U.S. treasury securities, along with a host of other measures to shore up the economy.
"The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity," the committee stated.
The discount rate has been correspondingly lowered by 75 basis points to 0.5 per cent
Ottawa Business Journal
The Federal Open Market Committee's move was a surprise to analysts who had predicted the still-low rate of 0.5 per cent, which would have been a cut of 50 basis points from the one-per-cent target announced in October.
"Labour market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined," read the FOMC's statement. "Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further."
The central bank added that inflation is expected to fall further as the price of energy and other commodities continue to drop.
"The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability," the statement read, with the committee indicating that the federal funds rate would remain at "exceptionally low levels" for some time.
Besides the dramatic cut, the committee said it was prepared, if needed, to expand its previously announced purchases of agency debt and mortgage-backed securities to provide support to the ailing U.S. housing and mortgage markets, and that it was considering buying longer-term U.S. treasury securities, along with a host of other measures to shore up the economy.
"The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity," the committee stated.
The discount rate has been correspondingly lowered by 75 basis points to 0.5 per cent
Ottawa Business Journal
