The Fed’s 2008 FOMC transcripts are out along with accompanying presentation materials.
Most will remember September 2008, which was when the credit crisis got really ugly as Lehman Brothers went bankrupt and interest rates surged.
You would think that would’ve been good time for the Fed to cut rates. But it didn’t. It kept its benchmark interest rate at 2%.
For that September 16 meeting, the Fed had prepared three drafts for three scenarios including a rate hike.
Here’s what they ultimately went with:
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 per cent.
Strains in financial markets have increased significantly and labour markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.
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. Ms. Cumming voted as the alternate for Timothy F. Geithner.