The FOMC, as largely expected, cut its benchmark lending rate by 50-basis points to 3.0%. In the accompanying statement, the Fed reiterated lingering downside risks to growth – acknowledging that financial markets remain under considerable stress amid tightening credit conditions. The Fed said that recent data points toward further deterioration in the housing market and softening in labor conditions.

However, the Fed highlighted the need to continue monitoring inflation in spite of expectations for it to moderate in the coming quarters.