Policymakers voted 10-0 to cut the fed funds target rate for overnight bank loans — from 1% to a record-low range of 0% to 0.25%. Analysts expected a half-point cut.
The Fed said in its post-meeting statement that the economy has deteriorated across the board, justifying "exceptionally low" rates for "some time."
With rates essentially at zero, the Fed will "employ all available tools" to jump-start the economy and restore normal credit. It specifically cited the use of its balance sheet, which has swelled above $2 trillion.
The central bank said it will buy "large quantities" of debt issued by government-backed mortgage lenders Fannie Mae and Freddie Mac over the next few quarters and buy mortgage-backed securities to bolster the housing market. Last month the Fed announced a $600 billion plan. It now says it's ready to expand those purchases if needed. |