FOMC Statement

Press Release

Release Date: January 28, 2009

For immediate release

The Federal Open Market Committee decided today to keep its target range for the federal funds

rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely

to warrant exceptionally low levels of the federal funds rate for some time.

Information received since the Committee met in December suggests that the economy has

weakened further. Industrial production, housing starts, and employment have continued to decline

steeply, as consumers and businesses have cut back spending. Furthermore, global demand appears

to be slowing significantly. Conditions in some financial markets have improved, in part reflecting

government efforts to provide liquidity and strengthen financial institutions; nevertheless, credit

conditions for households and firms remain extremely tight. The Committee anticipates that a

gradual recovery in economic activity will begin later this year, but the downside risks to that

outlook are significant.

In light of the declines in the prices of energy and other commodities in recent months and the

prospects for considerable economic slack, the Committee expects that inflation pressures will

remain subdued in coming quarters. Moreover, the Committee sees some risk that inflation could

persist for a time below rates that best foster economic growth and price stability in the longer

term.

The Federal Reserve will employ all available tools to promote the resumption of sustainable

economic growth and to preserve price stability. The focus of the Committee's policy is to support

the functioning of financial markets and stimulate the economy through open market operations

and other measures that are likely to keep the size of the Federal Reserve's balance sheet at a high

level. The Federal Reserve continues to purchase large quantities of agency debt and mortgagebacked securities to provide support to the mortgage and housing markets, and it stands ready to

expand the quantity of such purchases and the duration of the purchase program as conditions

warrant. The Committee also is prepared to purchase longer-term Treasury securities if evolving

circumstances indicate that such transactions would be particularly effective in improving

conditions in private credit markets. The Federal Reserve will be implementing the Term AssetBacked Securities Loan Facility to facilitate the extension of credit to households and small

businesses. The Committee will continue to monitor carefully the size and composition of the

Federal Reserve's balance sheet in light of evolving financial market developments and to assess

whether expansions of or modifications to lending facilities would serve to further support credit

markets and economic activity and help to preserve price stability.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C.

Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Dennis P.

Lockhart; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who

preferred to expand the monetary base at this time by purchasing U.S. Treasury securities rather

than through targeted credit programs.