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Press Release

Release Date: March 16, 2010
For immediate release
Information received since the Federal Open Market Committee met in January suggests that
economic activity has continued to strengthen and that the labor market is stabilizing. Household
spending is expanding at a moderate rate but remains constrained by high unemployment, modest
income growth, lower housing wealth, and tight credit. Business spending on equipment and
software has risen significantly. However, investment in nonresidential structures is declining,
housing starts have been flat at a depressed level, and employers remain reluctant to add to
payrolls. 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 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
has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of
agency debt; those purchases are nearing completion, and the remaining transactions will be
executed by the end of this month. The Committee will continue to monitor the economic outlook
and financial developments and will employ its policy tools as necessary to promote economic
recovery and price stability.
In light of improved functioning of financial markets, the Federal Reserve has been closing the
special liquidity facilities that it created to support markets during the crisis. The only remaining
such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30
for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans
backed by all other types of collateral.
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 continuing to express the expectation of exceptionally low
levels of the federal funds rate for an extended period was no longer warranted because it could
lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and
financial stability.