Breaking –

The Federal Reserve raises the discount window rate. This one caught the market by surprise as S&P futures dropped 8 points within seconds.

Release Date: February 18, 2010

For release at 4:30 p.m. EDT

The Federal Reserve Board on Thursday announced that in light of continued improvement in financial market conditions it had unanimously approved several modifications to the terms of its discount window lending programs.

Like the closure of a number of extraordinary credit programs earlier this month, these changes are intended as a further normalization of the Federal Reserve’s lending facilities. The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy, which remains about as it was at the January meeting of the Federal Open Market Committee (FOMC). At that meeting, the Committee left its target range for the federal funds rate at 0 to 1/4 percent and said it anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The changes to the discount window facilities include Board approval of requests by the boards of directors of the 12 Federal Reserve Banks to increase the primary credit rate (generally referred to as the discount rate) from 1/2 percent to 3/4 percent. This action is effective on February 19.

In addition, the Board announced that, effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight. Primary credit is provided by Reserve Banks on a fully secured basis to depository institutions that are in generally sound condition as a backup source of funds. Finally, the Board announced that it had raised the minimum bid rate for the Term Auction Facility (TAF) by 1/4 percentage point to 1/2 percent. The final TAF auction will be on March 8, 2010.

Easing the terms of primary credit was one of the Federal Reserve’s first responses to the financial crisis. On August 17, 2007, the Federal Reserve reduced the spread of the primary credit rate over the FOMC’s target for the federal funds rate to 1/2 percentage point, from 1 percentage point, and lengthened the typical maximum maturity from overnight to 30 days. On December 12, 2007, the Federal Reserve created the TAF to further improve the access of depository institutions to term funding. On March 16, 2008, the Federal Reserve lowered the spread of the primary credit rate over the target federal funds rate to 1/4 percentage point and extended the maximum maturity of primary credit loans to 90 days.

Subsequently, in response to improving conditions in wholesale funding markets, on June 25, 2009, the Federal Reserve initiated a gradual reduction in TAF auction sizes. As announced on November 17, 2009, and implemented on January 14, 2010, the Federal Reserve began the process of normalizing the terms on primary credit by reducing the typical maximum maturity to 28 days.

The increase in the discount rate announced Thursday widens the spread between the primary credit rate and the top of the FOMC’s 0 to 1/4 percent target range for the federal funds rate to 1/2 percentage point. The increase in the spread and reduction in maximum maturity will encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve’s primary credit facility only as a backup source of funds. The Federal Reserve will assess over time whether further increases in the spread are appropriate in view of experience with the 1/2 percentage point spread.

The FOMC has spoken:

Release Date: January 27, 2010

For immediate release

Information received since the Federal Open Market Committee met in December suggests that economic activity has continued to strengthen and that the deterioration in the labor market is abating. Household spending is expanding at a moderate rate but remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls. Firms have brought inventory stocks into better alignment with sales. While bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack continuing to restrain cost pressures and with longer-term inflation expectations stable, inflation is likely to be subdued for some time.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter. The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in financial markets.

In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1. The Federal Reserve is in the process of winding down its Term Auction Facility: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit wil be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.

Federal Reserve Chairman Ben Bernanke is in the middle of his confirmation process for another term as the head banker of the land. Yesterday it was announced that Time Magazine named Mr. Bernanke their “Person of the Year” for being someone who has made an impact on the past year.

Time Magazine depicts Ben Bernanke as an individual who has helped save the economy, ordered the mass printing of dollars to aid the banks, and was responsible in preventing another Great Depression.

The magazine does briefly mention the past, and how Ben Bernanke missed some of the signals that led to the catastrophe, but the only magazine cover that Ben Bernanke should be on is “Prison Weekly”, as its newest lifetime member to one of their fine prisons around the nation for running the biggest scam in this nations history.

Mr. Bernanke, before becoming the head banker of the land, was a professor at Princeton University where he touted himself as a leading scholar of the Great Depression. With all that knowledge of the past events why is it then that he could not see the developing events that ended up putting this nation into an economic tailspin?

If I were a member of the Senate confirmation panel I would ask Ben Bernanke the following:

Ben, as an expert in all things concerning the Great Depression, how is it that you failed to recognize the numerous warning signs that led to our current financial demise? Additionally, someone who is so knowledgeable in what led up to the Great Depression as yourself, would you not think that you should have been able to see the trouble before anyone else did? Even people who are not professors or scholars of the Great Depression saw this coming. Why is it Ben that you kept telling this Senate panel, and through other briefings in your first term that a housing bubble would not be a problem, why it was you said it would be ‘contained’, why there was no danger of a credit collapse, and why it is that you would not listen to so many on the outside who said you were, and now proven, to have been wrong in your assumptions of the situation?

Mr. Bernanke, you come before this panel seeking confirmation to a second term. Why should we feel any more comfortable with your forecasts and current assumptions of the economy when your forecasts and assumptions were proven to be so terribly wrong in the past?

How is it Mr. Bernanke that individual analysts wrote to us in 2007 and 2008 predicting what would happen and they were right, yet you still failed to recognize the issues? How can people who are not even professors understand the situation as it was about to unfold, but you still missed it?

Mr. Bernanke, you ask us to confirm you to a second term as the Chairman of the Federal Reserve Bank. If we were to grade you on your abilities to foresee problems then you have grossly failed. How then Mr. Bernanke should we grant you a second term? How do we know that your forecast and projections are any better this time? Are you telling us Mr. Bernanke that we should confirm you simply on faith?

Not only did Ben Bernanke get everything wrong in the early stages of the crisis, but he has since embarked on a path of borderline illegal activity under the umbrella of ‘exigent circumstances‘. The American people, and many in Washington wants a full audit of the Federal Reserve. But, Ben Bernanke continues to play the American people as being too naive to understand the facts of what an audit means. He continues to make the American people think that an audit open the door to Congress setting monetary policies. A scare tactic card being played by Ben as he knows the last people on this planet they want to handle money is Congress. But the truth is that an audit is not about getting Congress involved in monetary policy, it is simply wanting to know where the money went, a full accounting.

I for one sure would like to know just where the money really is Ben, who it went to, what the tax payers got in return, what are the assets being held as collateral, and what money was flowed to foreign countries all under that catch all ‘exigent circumstances’. Andwhy on Earth is Goldman Sachs still being granted bank holding company status? I don’t see any Goldman Sachs branch offices in my neighborhood, so why are the taxpayers still on the hook for their ‘easy withdraws’ from the discount window?

Ben Bernanke has failed in serving the people of this nation as the top banker. The only ones who want Ben Bernanke appointed to a second term are the Wall Street firms that he, along with Tim Geithner aid and abetted in what is growing into the largest ponzi scheme ever perpetrated on the American people.

Myself, and many others, reported on the flawed forecasts of Ben Bernanke even before the crisis became what we now know it to be. We sent faxes to Congress warning of the mistakes the head banker was making, warned that the credit crisis would spread, and no one listened. Instead the Government just went along with Ben Bernanke and the Treasury Secretary (Hank Paulson, and now his protege Timmy Geithner).

To the members of the Senate confirmation committee – You now know what so many of us out here in the ‘real world’ warned you about was true. You ignored us and now you see where that got this nation. You ignored the American people when the overwhelming majority asked you not to approve the bailouts and instead continued to rely on the individuals who led the nation into the crisis in the first place.Are you going to ignore the American people again by appointing Ben Bernanke to another term?

I am well aware that these problems started to fester before Ben Bernankes’ taking of the helm. But, like in a baseball game when the pitcher is screwing up you replace him. We replaced the ‘lefty Alan Greenspan’ with the ‘fastball king Ben Bernanke’, and ‘fastball Ben’ has, through his failure to recognize and acknowledge the growing problems has loaded the bases. I say it is time for another change on the mound before he completely throws the game, and this nation.

To the Senate I urge you to vote ‘no’ on the confirmation of Ben Bernanke, please, before it is to late.

Reprinted in entirety from Daily Kos:

This Thursday, the Senate Banking Committee will hold hearings on whether to confirm Ben Bernanke — who was appointed by George W. Bush — to another six-year term as Chair of the Federal Reserve.

Who is Ben Bernanke? Under his watch, the Federal Reserve turned over trillions of dollars in bailouts to big Wall Street banks and didn’t demand accountability in return. And Bernanke still refuses to tell Congress how those trillions of dollars were used.

This week, we have an opportunity that we won’t have again for another six years: to replace Ben Bernanke with someone who will help average Americans, not giant banks. But we urgently need your help.

Click here and tell the Senate to vote no on “Bailout Ben.”

We’ll give every petition signer a phone number to call to help make a difference right away — and we’ll deliver these signatures to key senators before the vote.

Just yesterday, Sen. Bernie Sanders (I-VT) went on national TV to announce his “no” vote — saying Bernanke was “part of the problem” facing our economy.

But many senators are on the fence. Sen. Chris Dodd (D-CT), the head of the Senate Banking Committee, called the Federal Reserve an “abysmal failure” but said he was “waiting to see how members react” before deciding whether to support Ben Bernanke’s reappointment.

We need to show these senators right now that it’s unacceptable for Democrats to continue George W. Bush’s failed policy of putting Wall Street first.  The Federal Reserve’s job is to promote “maximum employment.” But 15 million Americans are out of work — and the Federal Reserve is doing nothing to help.  Can you help by signing our petition, and then telling your friends?

Click here to take action right away.

Thanks, as always, for being a bold progressive,

–Aaron Swartz, Stephanie Taylor, Adam Green, and the PCCC team

(source: Daily KOS)

RT Note: It does not matter that Ben Bernake was a George W Bush appointee or not. The significant factor is how Ben Bernake has missed the entire problem. Put aside partisan politics, this is all about Ben Bernake and the Federal Reserve. I for one have submitted my say to stop the reappointment of Ben Bernanke.

When the Bank of Japan releases their meeting minutes it is often refreshing to read some straight forward language instead of word play that the U.S. Federal Reserve so much likes to do.

Bank of Japan minutes:

Release Date: June 24, 2009

For immediate release

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

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; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

My take on the statement:

The economy is still contracting albeit at a slow pace, but it is still contracting, no bottom yet. Businesses that are making adjustments to inventory levels in order to match sales suggests that companies do not foresee any significant growth in the economy and are hunkering down for a long spell of reduced sales.

The Fed said they anticipate that all of the quantitative easing will contribute to a gradual resumption of sustainable growth in the context of price stability. What? To say that they will measure economic growth as a measure of price stability says to me that as long as they keep flooding the market with money and keep prices ‘floating’ will equate to growth to them. This is ridiculous, how about organic growth Ben?

Inflation will remain subdued for some time suggests to me that they still anticipate deflationary forces outweighing the mass printing of dollars.

Yet again the Federal Reserve in their FOMC minutes has lowered the outlook for growth in the broad economy. As I have stated from previous FOMC actions I said don’t be surprised when the FOMC revises the GDP growth lower again, and that they did today.

FOMC Minutes excerpt:

Staff Economic Outlook
[...]In the forecast prepared for the meeting, the staff revised down its outlook for economic activity. The deterioration in labor market conditions was rapid in recent months, with steep job losses across nearly all sectors. Industrial production continued to contract rapidly as firms responded to the falloff in demand and the buildup of some inventory overhangs. The incoming data on business spending suggested that business investment in equipment and structures continued to decline. Single-family housing starts had fallen to a post-World War II low in January, and demand for new homes remained weak. Both exports and imports retreated significantly in the fourth quarter of last year and appeared headed for comparable declines this quarter. Consumer outlays showed some signs of stabilizing at a low level, with real outlays for goods outside of motor vehicles recording gains in January and February. Financial conditions overall were even less supportive of economic activity, with broad equity indexes down significantly amid continued concerns about the health of the financial sector, the dollar stronger, and long-term interest rates higher. The staff’s projections for real GDP in the second half of 2009 and in 2010 were revised down, with real GDP expected to flatten out gradually over the second half of this year and then to expand slowly next year as the stresses in financial markets ease, the effects of fiscal stimulus take hold, inventory adjustments are worked through, and the correction in housing activity comes to an end. The weaker trajectory of real output resulted in the projected path of the unemployment rate rising more steeply into early next year before flattening out at a high level over the rest of the year. The staff forecast for overall and core personal consumption expenditures (PCE) inflation over the next two years was revised down slightly. Both core and overall PCE price inflation were expected to be damped by low rates of resource utilization, falling import prices, and easing cost pressures as a result of the sharp net declines in oil and other raw materials prices since last summer.[...]

I will say it again now. Expect the FOMC to revise their 2010 growth expectations lower in the coming months.

The FOMC statement this afternoon amounts to massive printing (and devaulation) of the U.S. dollar (what happened to the ’strong dollar policy?). The actions taken today tell me that fear is rising in D.C. that foreign holders of U.S. debt will unload, or at least curtail further purchases of tresuries.The FED is embarking down a dangerous road…

I hear Ben Bernanke himself will be manning the presses at the U.S. mint working overtime tonight.

The policy statement is shown below:

—–

For immediate release

Information received since the Federal Open Market Committee met in January indicates that the economy 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.  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.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued.  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.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability.  The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.  To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion.  Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.  The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets.  The Committee will continue to carefully monitor the size and composition of the Federal Reserve’s balance sheet in light of evolving financial and economic developments.

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; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Economic forecast by the Federal Reserve (from the FOMC minutes)

- 2009 GDP growth forecast revised to -0.5% to -1.3% from -0.2% to 1.1% range prior.
- 2009 jobless rate forecast revised to 8.5-8.8% from 7.1-7.6% range prior.
- 2009 PCE inflation forecast at 0.9-1.1%

- 2010 GDP growth forecast revised to +2.5-3.3% from 2.3-3.2% prior forecast.
- 2010 jobless rate forecast revised to 8-8.3% from 6.5-7.3% prior forecast.
- 2010 PCE inflation forecast 0.8-1.5%

- Introduces 2011 GDP forecast of +3.8-5%, and jobless rate forecast of 6.7-7.5%
- 2011 PCE inflation forecast 0.7-1.5%
- Forecasts long term GDP growth of 2.5%-2.7% and  jobless rate at 4.8-5.0% (long term defined as 5 or 6 years by Bernanke).

This is VERY wishful thinking on the part of the Federal Reserve. Realistically I do not see how these projected GDP growth numbers can be achieved. Well, it would not be the first time their forecast has been wrong.

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 mortgage-backed 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 Asset-Backed 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.

The 860 level I said to watch last night remains an important level to watch this morning. Remember that this is FOMC day. At 2:15pm (US EST) the FOMC will release their statement.

S&P 500 Futures

FOMC CUTS RATES 75BPS TO 0.25% (MORE THAN EXPECTED)
- To deploy all available tools, see rates at exceptionally low rates for some time

Full FOMC Statement:

Press Release

Release Date: December 16, 2008

For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined.  Financial markets remain quite strained and credit conditions tight.  Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably.  In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.  In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level.  As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.  The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.  Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.  The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco.  The Board also established interest rates on required and excess reserve balances of 1/4 percent.