FOMC Statement - Fed Cuts Target Rate 25bp

U.S. Federal Open Market Committee Statement: Text2007-12-11 14:16 (New York)

Dec. 11 (Bloomberg) -- The following is the full textof the statement released today by the Federal Reserve:

The Federal Open Market Committee decided today tolower its target for the federal funds rate 25 basis pointsto 4 1/4 percent.

Incoming information suggests that economic growth isslowing, reflecting intensification of the housingcorrection and some softening in business and consumerspending. Moreover, strains in financial markets haveincreased in recent weeks. Today's action, combined with thepolicy actions taken earlier, should help promote moderategrowth over time.

Readings on core inflation have improved modestly thisyear, but elevated energy and commodity prices, among otherfactors, may put upward pressure on inflation. In thiscontext, the Committee judges that some inflation risksremain, and it will continue to monitor inflationdevelopments carefully.

Recent developments, including the deterioration infinancial market conditions, have increased the uncertaintysurrounding the outlook for economic growth and inflation.The Committee will continue to assess the effects offinancial and other developments on economic prospects andwill act as needed to foster price stability and sustainableeconomic growth.

Voting for the FOMC monetary policy action were: Ben S.Bernanke, Chairman; Timothy F. Geithner, Vice Chairman;Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; RandallS. Kroszner; Frederic S. Mishkin; William Poole; and KevinM. Warsh. Voting against was Eric S. Rosengren who preferredto lower the target for the federal funds rate by 50 basispoints at this meeting.

In a related action, the Board of Governors unanimouslyapproved a 25 basis point decrease in the discount rate to 43/4 percent. In taking this action, the Board approved therequests submitted by the Boards of Directors of the FederalReserve banks of New York, Philadelphia, Cleveland,Richmond, Atlanta, Chicago and St. Louis.