Fed Minutes Reveal ‘Significant’ Risk of Downturn
Federal Reserve officials said during their Jan. 29-30 meeting that lower interest rates may be needed for some time in order to stave off the affects of a faltering U.S. economy, Bloomberg News reported.
“Several participants noted that the risks of a downturn in the economy were significant,” according to minutes of the Fed’s Jan. 9 and 21 conference calls and Jan. 29-30 meeting. “The availability of credit to consumers and businesses appeared to be tightening, likely adding to restraint on economic growth,” the minutes added.
U.S. central bankers also lowered their expectations for 2007 fourth quarter gross domestic product growth to 1.8%-2%. FOMC officials in October had predicted fourth quarter GDP growth of 1.8%-2.5%, Bloomberg said.
During their January meeting, members of the Federal Open Market Committee voted to lower their target for the benchmark federal funds by half a point to 3%. That cut followed an unscheduled "emergency" rate cute of 0.75% earlier in January.
The Fed has now cut rates 5.25% since September.
