FOMC sees yearlong recession, minutes show

MarketWatch ^ | Nov. 19, 2008 2:21 p.m. EST | Rex Nutting, MarketWatch

[Ernest_at_the_Beach]

Fed policymakers will take 'whatever steps necessary'

WASHINGTON (MarketWatch) - Federal Reserve policymakers now expect the U.S. economy to contract for as much as a year, with the risk that the slowdown could persist for even longer, according to edited minutes of a closed-door meeting of the Federal Open Market Committee on Oct. 28 and 29.

The Fed governors and Fed bank presidents "generally expected the economy to contract moderately in the second half of 2008 and the first half of 2009, and agreed that the downside risks to growth had increased," the minutes said.

Without using the word, the Fed is now forecasting a recession lasting a year or so.

The committee said it "would take whatever steps were necessary to support the recovery." Read the minutes.

Nevertheless, "the subsequent recovery would be relatively gradual," the committee said. "Financial stresses would recede only slowly, notwithstanding the extraordinary measures that had been taken."

The central bankers also said they expected inflation to "diminish materially in coming quarters ... to levels consistent with price stability." Some policymakers said economic weakness could lead to inflation falling too much, opening up the specter of deflation.

The minutes were released on Wednesday, after the usual three-week delay. They also include a summary of two conference calls held by the FOMC.

[Ernest_at_the_Beach]

fyi

[AU72]

Obama will have a whole year to blame Bush.

[NeoCaveman]

Obama will have a whole year to blame Bush.

Obama will have 4 - 8 years to blame Bush.

[rabscuttle385]

Fed policymakers will take 'whatever steps necessary'

One Currency to rule them all,
One Congress to authorize it,
One Central Bank to bring them all
and in the recession bind them.

Witness the coming-of-age of the Beast that the Founders feared the most: untethered, fully-centralized rule of a once free People.

May God have mercy on the United States of America and her People.

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[rabscuttle385]

*Ping!*

[RSmithOpt]

Bet you a dollar to a donut, it will be much longer than a year....more like only 3 if we are lucky.

[misterrob]

Lots of asset deflation still to be done, lots of excess to be worked out, lots of debt to be resolved and that’s even in a free market situation.

I am trying to be philosophical in all of this but in seemingly no time my world has been turned upside down with no clarity on WTF to do in my business. I could very well see losing it which I cannot really begin to fathom.

[montag813]

Obama will have 4 - 8 years to blame Bush.

Democrats will have 40-80 years to blame Bush. Remember Hoover?

[OCC]

What were they forecasting this time last year? What is their track record?

[SierraWasp]

This Obama maladministration is gonna git old real fast!!!

Remember cult leader Jim Jones, the other "community organizer," without the ACORN laced koolaid!!!

Willie Brown, Mervyn Dymally, Jimmy Carter and Rosalyn were great admirers, too!!! In other words... Demonicrats!!!

[dalereed]

It’s going to be a world wide depression and there isn’t anything the Fed, Body Odor, or the democrap Congress can do about it.