Fed Sees Recession Lingering Through '09

By Harry Kimball,  Newser Staff
Posted Jan 6, 2009 4:09 PM CST
Fed Sees Recession Lingering Through '09
Lower prices, once welcome, could be a signal of economically dangerous deflation.   (AP Photo)

(Newser) – The Federal Reserve anticipates the recession will continue through 2009 despite its recent rate slash and other planned “nontraditional policies,” the Wall Street Journal reports. Minutes of the Fed's December 15-16 meeting, at which it cut rates to nearly zero, indicate a deep pessimism about the economy. Officials expect the unemployment rate to keep rising as the GDP contracts.

“Rates are going to be low for a long time,” a former director of the Fed’s Division of Monetary Affairs tells Bloomberg. “They see the economy as extremely weak. It is a dark document.” The central bank also intends to strengthen its balance sheet and use cash, not just interest rates, to stimulate the economy.
(Read more inflation stories.)

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