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NEW YORK CITY-Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally, according to the Federal Reserve. Yesterday’s action by the Federal Open Market Committee to lower its target for the federal funds rate 50 basis points to 4.8% is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time, according to a Federal Reserve release.

Readings on core inflation have improved modestly this year. However, the committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully, the release notes. Developments in financial markets since the committee’s last regular meeting have increased the uncertainty surrounding the economic outlook.

The release explains that the committee “will continue to assess the effects of these and other developments on economic prospects.” The committee will also “act as needed to foster price stability and sustainable economic growth.”

Voting for the FOMC monetary policy action were Ben Bernanke, chairman; Timothy F. Geithner, vice chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh. In a related action, the board of governors unanimously approved a 50-basis-point decrease in the discount rate to 5.25%.

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