Fed Panel Decided in November to Ease Credit to Reduce Risk of Stalled Economy
WASHINGTON -- Minutes of the Nov. 7 meeting of the Federal Reserve's policymaking committee confirm that the Fed decided to ease its grip on credit to reduce the risk of a stalled economy.</br></br>All but one of the Federal Open Market Committee's 12 members -- Fed Governor Lyle Gramley -- agreed at the November meeting that the Fed should relax its credit policy. The members also indicated a willingness to allow further easing in policy "in limited steps" if the economy and the money supply continued to grow at sluggish rates.</br></br>The committee lowered its target range for the federal funds rate to 7% to 11% from 8% to 12%. The fed funds rate is the interest rate charged by banks lending reserves to other banks and is watched closely by the Fed.</br></br>The committee also predicted that as a result of the October slowdown in money growth, M1 -- the narrowest measure of the money supply -- would grow at an annual rate of only 3% between September and December. That's below the Fed's target range of 4% to 8%. The committee agreed that more rapid growth in M1 "would be acceptable."</br></br>The Treasury Department has criticized the Fed in recent weeks for keeping monetary policy too tight and for not allowing enough growth in the money supply to accommodate continued economic growth.