Fed cuts by 1/2 point
[I’d thought they might be stingy and go for a quarter, but they went
for the full half. Now it gets interesting: what effect will this
have, and what kind of noises will the Fed make in the coming weeks?]
http://www.federalreserve.gov/newsevents/press/monetary/20070918a.htm
Press Release
Release Date: September 18, 2007
For immediate release
The Federal Open Market Committee decided today to lower its target
for the federal funds rate 50 basis points to 4-3/4 percent.
Economic growth was moderate during the first half of the year, but
the tightening of credit conditions has the potential to intensify
the housing correction and to restrain economic growth more
generally. Today’s action is intended to help forestall some of the
adverse effects on the broader economy that might otherwise arise
from the disruptions in financial markets and to promote moderate
growth over time.
Readings on core inflation have improved modestly this year.
However, the Committee judges that some inflation risks remain, and
it will continue to monitor inflation developments carefully.
Developments in financial markets since the Committee’s last regular
meeting have increased the uncertainty surrounding the economic
outlook. The Committee will continue to assess the effects of these
and other developments on economic prospects and will act as needed
to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans;
Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S.
Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 50-
basis-point decrease in the discount rate to 5-1/4 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,
Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.