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Press Release

Release Date: September 23, 2009
For immediate release
Information received since the Federal Open Market Committee met in August suggests that
economic activity has picked up following its severe downturn. Conditions in financial markets
have improved further, and activity in the housing sector has increased. Household spending
seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth,
lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and
staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into
better alignment with sales. Although economic activity is likely to remain weak for a time, the
Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and
monetary stimulus, and market forces will support a strengthening of economic growth and a
gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack likely to continue to dampen cost pressures and with longer-term
inflation expectations stable, the Committee expects that inflation will remain subdued for some
In these circumstances, the Federal Reserve will continue to employ a wide range of 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. 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 $1.25 trillion of
agency mortgage-backed securities and up to $200 billion of agency debt. The Committee will
gradually slow the pace of these purchases in order to promote a smooth transition in markets and
anticipates that they will be executed by the end of the first quarter of 2010. As previously
announced, the Federal Reserve’s purchases of $300 billion of Treasury securities will be
completed by the end of October 2009. 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.