California Business Minute™

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Hi, I am Tim Johnson and welcome to the California Business Minute.

The Federal Reserve Open Market Committee held steady with its key rate
and also said that inflation should remain in check at its recent meeting
last week.  The Fed also stated that it would phase out its purchase of
$1.25 trillion in agency-mortgage back securities and up to $200 billion
in agency debt by the first quarter of 2010 rather than by the end of the
year.  The decision delays the action than originally planned.  Additionally,
the Fed said it wants to allow a smoother transition, although some Wall
Street analysts were concerned about how that process will play out, removing
a major support for credit markets that have acted as the lifeblood for many
financial firms.

In the statement issued after its two-day policy meeting, the Federal Open
Market Committee said interest rates were likely to stay very low for an
extended period. Household spending, a key ingredient of U.S. economic strength,
remains constrained by ongoing job losses, as well as from  lower housing values
and tight credit, according to the Committee. 

The Committee however did upgrade its assessment of the US economy, stating that
activity has picked up after a severe downturn, yet economic activity has picked
up and conditions in financial markets have further improved. Longer-term inflation
expectations are stable and economic conditions are likely to warrant exceptionally
low levels of the federal-funds rate for an extended period, thus forecasting a
slow recovery.

I am Tim Johnson and this has been the California Business Minute.