Federal Reserve policy-makers agreed at their March 17-18 meeting that substantial additional purchases of a range of longer-term assets was appropriate to deal with a steep drop in economic activity across all sectors, minutes of the meeting showed on Wednesday.
Credit conditions remained very tight, and financial markets remained fragile and unsettled, with pressures on financial institutions generally intensifying this year, the central bank said in the minutes. Overall, participants expressed concern about downside risks to an outlook for activity that was already weak.
The Fed said staff for the Federal Open Market Committee lowered projections for U.S. real gross domestic product in the second half of 2009 and 2010, but the minutes did not offer any revised figures.
Reflecting steep job losses across nearly all sectors and contracting industrial production, the Fed said the revisions showed real GDP flattening out gradually over the second half of 2009 and then expanding slowly next year as the stresses in financial markets ease, the effects of fiscal stimulus take hold, inventory adjustments are worked through and the correction in housing activity comes to an end.
At the conclusion of the March 17-18 meeting, the Fed announced plans to buy up to $300 billion of longer-term U.S. Treasury securities and an additional $850 billion of agency mortgage debt to ease a deepening U.S. recession.
(Reporting by David Lawder and Glenn Somerville; Editing by Neil Stempleman)