Number: 98-856
Title: Federal Reserve Interest Rate Changes: 2000-2008
Authors: Marc Labonte, Specialist in Macroeconomic Policy 
Abstract: The Federal Open Market Committee (FOMC) decided at its scheduled meeting held on December 16 to lower the target rate for federal funds to a range from 0% to ¼% from 1% set at its meeting of October 24, 2008. In making its decision to reduce the target, the FOMC stressed the following factors: (1) the pace of economic growth and industrial production slowed markedly due to a decline in both consumer and business investment spending, (2) labor market conditions show further deterioration, (3) financial markets remain quite strained and credit conditions tight, and (4) inflation prospects have improved due to declines in energy and other commodity prices and the general weakening of economic conditions. The FOMC pledged to employ all available tools to promote the resumption of sustainable economic growth in a stable price environment. It expects that this will require an exceptionally low federal funds target for some time. The Board of Governors on December 16 also reduced the discount rate for primary credit to ½% from 1¼% and fixed the interest rate on required and excess reserve balances at ¼%. The next scheduled meeting of the FOMC is set for January 27-28, 2009.
Pages: 4
Date: December 30, 2008