"We're not in a credit crunch because of an inability to provide credit. It's because of an unwillingness to create credit," said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.
The economy's continued deterioration forced policymakers to reach further into their economic medicine chest.
"Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending," the Fed's rate-setting committee said in a statement. "Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession."
In its statement, the Fed's rate-setting panel expressed cautious optimism.
"Although the near-term economic outlook is weak," the panel said, "the committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth."
--
maura.reynolds@latimes.com
Times staff writer Tom Petruno contributed to this report.
