FOMC Meeting October 29th
- Fed appears more concerned on economic growth
- In contrast, the outlook for inflation has improved
- FOMC expects that the rate cut along with other measures, will help to alleviate the financial crisis
- However, members expect a slow recovery
FOMC lowered its target for the federal funds rate 50 basis points to 1%. The move was widely expected by market participants.
On the economic front, the statement remained pessimistic as it stressed that “the pace of economic activity appears to have slowed markedly”. This assessment mainly responded to declining consumer expenditures, weaker business equipment spending and industrial production, and economic moderation abroad. Members remained highly concerned that households and businesses face a difficult environment to access credit. This represents a significant risk to the economic outlook as “the intensification of financial market turmoil is likely to exert additional restraint on spending”.
