Print

Email story

Comment

Letter to the editor

Higher uncertainty led to Fed about-face

Its most recent interest rate cut may not be the last as members keep their options open.

WASHINGTON - Worsening problems in the housing, credit and financial markets drove the Federal Reserve to do an about-face at its Dec. 11 meeting and slice its key interest rate yet again with the hope it would help bolster an economy that was losing speed, according to meeting minutes made public Wednesday.

All those problems also greatly increased uncertainty about the economy's outlook, prompting Fed policymakers to keep all their options open about their next move, the minutes of the closed-door meeting revealed.

"Although members agreed that the stance of policy should be eased, they also recognized that the situation was quite fluid and the economic outlook unusually uncertain," the minutes said. Some members, however, feared that if problems grew worse, "a substantial further easing" of rates would be needed.

Fed Chairman Ben Bernanke and all but one of his colleagues, Boston Reserve Bank head Eric Rosengren, agreed to trim the Fed key rate by one-quarter percentage point to 4.25 percent, a two-year low. The central bank ordered its key rate to be lowered three times last year; the December reduction was most recent one.

[Last modified January 2, 2008, 23:38:01]