FOMC Enters Realm of 0% Interest Rates

The FOMC voted, and the Fed Funds Rate has now been given a TARGET RANGE of 0% to 0.25%.

The Discount Rate was cut 0.75% and is now at 0.50%.

Some of the statements are as follows:

• Sees rate at exceptionally low levels for some time;
• Labor markets have deteriorated;
• Inflationary pressures diminished appreciably;
• Inflation to moderate in coming quarters;
• Will purchase large quantities of Treasuries;
• Vote: was 10-0 for FED FUNDS rate action;
• Outlook for economic activity has weakened further;

A link to the text of the FOMC statement is here.

The dollar just tanked on this news against foreign currencies.

The 10-Year is now yielding 2.43% and the 30-year Treasury yield came in to a low yield of 2.88% right after the news.

Jon C. Ogg
December 16, 2008