Federal Reserve Leaves Rates Low

The Federal Open Market Committee decided to leave the Fed Funds rate at historic lows of 0% to .25% because the ecomony continues to contract.

“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment.  U.S. exports have  slumped as a number of major trading partners have also fallen into recession”

At the same time the Feds are hopeful about the future.

“Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth”

The Feds also announced they are expanding their program of purchasing mortgage-backed securities by $750 billion, bring the total purchases of these securities to $1.25 trillion.

The Feds have also started a new program, they plan to purchase up to $300 billion of longer-term Treasury securities over the next six months to drive down interest rates on mortgages.