98-856
Federal Reserve Interest Rate Changes: 2001-2008
October 29, 2008
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Summary
The Federal Open Market Committee (FOMC) decided at its scheduled meeting held on October 29 to lower the target rate for federal funds to 1% from 1?% set at its unscheduled meeting of October 8, 2008. In making its decision to reduce the target, the FOMC stressed the following factors: (1) the pace of economic growth appears to have slowed markedly owing importantly to a softening of consumer spending; (2) business equipment spending and industrial production have weakened; (3) economic slowdowns abroad have dampened the prospects for U.S. exports; (4) intensified strains in financial markets are also likely to further reduce spending; and (5) inflation prospects have improved due to declines in energy and other commodity prices. Because of the international scope of the financial turmoil, the downside risks to growth remain. Nevertheless, the FOMC believes that the substantial easing of monetary policy to date, combined with other measures to provide liquidity to the financial system, should help to promote moderate growth over time. The Board of Governors also reduced the discount rate for primary credit to 1?% from 1?%. The next scheduled meeting of the FOMC is set for December 11, 2008. This report will be updated as events warrant.
