The Fed has dropped the federal funds rate from a cyclical high of 5.25 percent in the second quarter of 2007 to the 0.0-0.25 percent range that?EUR??,,????'???s prevailed since the end of 2008, effectively exhausting the major tool of monetary policy.

NAHB stated that the Fed also has thrown open the discount window to both banks and primary securities dealers. It has waded into both the commercial paper market and the home mortgage market by substantially expanding its balance sheet operations in order to improve credit flows and reduce costs of credit in these markets.

Two major unexpected policy moves were announced on March 18. First, the FOMC decided to purchase and hold up to an additional $750 billion of agency mortgage-backed securities. FOMC will also hold an additional $100 billion of housing agency debt, on top of the $500 billion and $100 billion of agency mortgage-backed security and debt committed to earlier ?EUR??,,????'??+ that brings the overall total for this year to $1.45 trillion.

The Fed said these moves were taken to provide greater support to mortgage lending and housing markets.

FOMC decided to purchase up to $300 billion of longer-term Treasury securities over the next six months, to help improve conditions in private credit markets. NAHB stated this essentially amounts to a decision by the Fed to peg Treasury rates, apparently in the two- to 10-year range, with the expectation that downward pressure will be put on rates of comparable maturity in private credit markets. – Courtesy of NAHB