|
|
The Federal Open Market Committee emphasized that financial markets remained under considerable stress and noted that the functioning of many markets remained impaired. Participants stressed that it could take some time for the financial system to return to a more normal footing, and a number of participants were of the view that financial headwinds would probably continue to restrain economic activity through much of next year.
Meeting on 29-30 April, the FOMC noted that conditions across a number of financial markets had improved. Equity prices and yields on Treasury securities had increased, volatility in both equity and debt markets had ebbed somewhat, and a range of credit risk premiums had moved down.
However, strains in some short-term funding markets increased. Pressures on bank balance sheets and capital positions appeared to mount further, reflecting additional losses on asset-backed securities and on business and household loans.
Conditions in the money markets of major foreign economies remained strained, particularly in the
Strains in short-term funding markets had intensified, in part reflecting continuing pressures on the liquidity positions of financial institutions. Despite a narrowing of spreads on corporate bonds, credit conditions were seen as remaining tight.