Provided by: Federal Reserve
Official Release: Statement

Discount Rate: 1.25%, forecast 1.25%, pr. 1.75% 

The FOMC lowered rates by 50 basis points, as expected to 1%, a four-year low. With a gloomy outlook for growth as a result of weaker consumer spending, weaker demand for exports, and the financial crisis, the Fed seems to have left the door open for another rate cut in its next meeting. Inflation is seen to be moderating in the coming quarters and the recent actions by the Fed should help to improve credit and growth. 

From the Release: "The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.

The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.

In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.

Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

Provided by: Federal Reserve
Official Release: Statement

The Federal Reserve, along with the other main central banks around the world cut rates by 50 basis points today in an unscheduled move. The coordinated effort is an attempt to lower borrowing costs during a time when money and credit markets have freezed up and to help avoid a global recession. In the join statement, the central banks see inflation easing and are now concerned about the risks to growth.

From the Release: "Inflationary pressures have started to moderate in a number of countries, partly reflecting a marked decline in energy and other commodity prices. Inflation expectations are diminishing and remain anchored to price stability. The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability. Some easing of global monetary conditions is therefore warranted."

Provided by: Federal Reserve
Official Release: Press Release

From the Release: "Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability."

Federal Open Market Committee (FOMC) Minutes for August 5th
Provided by: Federal Reserve
Official Release: HTML PDF 

The minutes from the FOMC suggested that the Fed is concerned about growth and that the current rate is not too low. It may mean that the Committee is ready to hold rates steady in the near terms in order to make sure growth does not regress. Still rather hawkish language regarding inflation

Members were split about the inflation outlook, with some saying the recent reduction in oil prices caused risks to "diminish modestly", while other members though inflation risks had "increased." 

From the Release: ""A number of participants worried about the possibility that core inflation might fail to moderate next year unless the stance of monetary policy was tightened sooner than currently anticipated by financial markets.

In the Committee's discussion of monetary policy for the intermeeting period, members agreed that labor markets had softened further, that financial markets remained under considerable stress, and that these factors--in conjunction with still-elevated energy prices and the ongoing housing contraction--would likely weigh on economic growth in coming quarters. In addition, members saw continuing downside risks to this outlook, particularly reflecting possible further deterioration in financial conditions. Members generally anticipated that inflation would moderate; however, they emphasized the risks to the inflation outlook posed by persistent high readings on headline inflation and a possible unmooring of inflation expectations. Against this backdrop, nearly all members judged that leaving the federal funds rate unchanged at this meeting was appropriate and would most effectively promote progress toward the Committee's dual objectives of maximum employment and price stability. Most members did not see the current stance of policy as particularly accommodative, given that many households and businesses were facing elevated borrowing costs and reduced credit availability due to the effects of financial market strains as well as macroeconomic risks. Although members generally anticipated that the next policy move would likely be a tightening, the timing and extent of any change in policy stance would depend on evolving economic and financial developments and the implications for the outlook for economic growth and inflation."

Provided by: Federal Reserve
Official Release: Press Release

The Federal Open Market Committee held rates at 2%, and said the inflation outlook remains highly uncertain and growth risks remain. The Dollar weakened in the 5 minutes after the release, as it looks like the Fed may be concerned more about growth and does not seem ready to raise rates in order to battle inflation. Traders were looking for a move in October, but the chance according to futures markets, declined to 54% for an Oct hike in the 15 minutes after the release, compared to 60% pre-FOMC. Still the move against the Dollar was not very strong, implying Dollar strength wasn't dynamically altered.

From the Release: "Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."

EUR/USD - Euro Hits 6-Week Low vs Dollar Before Fed, Initial Euro Gains After Release Cut Down: Overnight the Euro-Dollar pair was down 100 pips following weak European data expectations of perhaps a statement more focused on the risks of inflation. The pair retracted 30 pips in the minutes following the release, but recovered to pre-decision levels rather quickly as the pair's bulls and bears both exerted their influence.

USD/JPY - Dollar Gains vs Yen as US Stock Rally on Oil Prices, Unable to Break 108.30 Resistance: The Yen gained initially against the Dollar overnight, but the Dollar found support and recovered to the 108.25 area prior to Fed decision. US stocks, bolstered by yet another day of oil declines, rallied during NY morning trading. The DOW industrials index was up 200 points by 12:30 PM and oil was off by $2.50 at that time. Still, the Dollar was not able to break resistance at 108.30 and was lower following the FOMC decision.

The Federal Reserve
Official Release: Press Release

The FOMC held rates at 2% and offered little in the way of any surprises. The key details in the announcement had been tested in speeches and came in about as expected. The Fed seems less concerned now about the recent downturn the economy experienced, and shifting their focus to inflation. It will be some time before the Fed can increase interest rates as the economy is still sputtering with housing yet to find a bottom and other indicators pointing to weaker growth ahead. However to combat inflation, which will be a major theme the rest of the year, the next move the Fed will do will be a rate increase.

From the Release: "The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.

Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability."

Federal Open Market Committee Minutes for April 29-30 Meeting
Provided by: Federal Reserve
Official Release: HTML PDF

The Federal Reserve seems ready to stay on the sidelines and the decision to cut rates by 25 basis points was a "close call." The risks to growth and inflation are now balanced and only "significant weakening of the economic outlook" would force another interest rate cut. Inflation expectations were put higher, with the personal consumption index expected to jump to a range of 3.1 to 3.4% compared to the previous forecast of a 2.1% to 2.4% rise. Also, the worst part of the credit crisis seems to have passed. The Fed did also reduce their projections for economic growth this year by almost a full percentage point. Expectations are now for growth to increase by 0.3% to 1.2% this year.

The minutes did not do much to strengthen the Dollar on a day of Dollar weakness, so the markets may have priced in the pause and have not gleamed new information. Only a change of language regarding inflation's risks, and the talk of raising interest rates would have supported the Dollar. US stocks were reeling today, and the Dollar's losses intensified against the Yen.

From the Release: " The Committee agreed that that the statement to be released after the meeting should take note of the substantial policy easing to date and the ongoing measures to foster market liquidity. In light of these significant policy actions, the risks to growth were now thought to be more closely balanced by the risks to inflation. Accordingly, the Committee felt that it was no longer appropriate for the statement to emphasize the downside risks to growth. Given these circumstances, future policy adjustments would depend on the extent to which economic and financial developments affected the medium-term outlook for growth and inflation. In that regard, several members noted that it was unlikely to be appropriate to ease policy in response to information suggesting that the economy was slowing further or even contracting slightly in the near term, unless economic and financial developments indicated a significant weakening of the economic outlook."

Provided by: The Federal Reserve
Official Release: Statement

Two members dissented against the rate cut, as policy makers strengthened their language against inflation. After a knee-jerk reaction in which the Dollar gained, it was moderately lower against its rivals in the 30 minutes after the release. The Fed painted a rather weak picture of the economy, but that the recent cuts should work to help growth going forward. The statement may not have been as hawkish as some had hoped, as it leaves options open for the Fed in terms of its next move.

From the Release:

""Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."

"Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months...uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully."

Federal Open Market Committee Minutes for March 17-18 Meeting
Provided by: Federal Reserve
Official Release: HTML PDF

FOMC meeting minutes re-iterated some of the things Bernanke has been saying recently, most importantly that Fed official see that a contraction in the economy during the first half of 2008, with several members believing that a "prolonged" and "severe" downturn could not be ruled out.

From the Release:

"In the Committee's discussion of monetary policy for the intermeeting period, most members judged that a substantial easing in the stance of monetary policy was warranted at this meeting. The outlook for economic activity had weakened considerably since the January meeting, and members viewed the downside risks to economic growth as having increased. Indeed, some believed that a prolonged and severe economic downturn could not be ruled out given the further restriction of credit availability and ongoing weakness in the housing market. Members recognized that monetary policy alone could not address fully the underlying problems in the housing market and in financial markets, but they noted that, through a range of channels, lower short-term real interest rates should help buoy economic activity and ameliorate strains in these markets."

Statement from the Federal Reserve

The Federal Reserve cut rates by 75 basis points, ignoring calls from some corners to cut rates by 100 basis points. There were two dissenting votes for the cut, from Dallas' Fisher and Philadelphia's Plosser, who have warned about the risks of inflation to the economy. The Dollar should be strengthened by the Fed move, and it saw some gains against the Euro, Yen and Pound in the minutes following the release.

From the Statement:

"Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters. Inflation has been elevated, and some indicators of inflation expectations have risen. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. It will be necessary to continue to monitor inflation developments carefully. Today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability."

The Federal Reserve and FOMC

Discount Rate: 3.50%, forecast 3.50%, pr. 4.00%.

The Fed says in its statement:

"Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets. The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully. Today's policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks."