In the first category, we cut the federal funds rate target and did so aggressively after the economy began to weaken substantially in late 2007. By December of last year, we had reduced the target to a range of 0 to 1/4 percent.
Lowering the federal funds rate helped offset a portion of the effects of financial disruption on credit conditions for households and businesses. And policy easing should have helped the flow of credit by reducing some of the concerns about the effects of a weaker economy on repayment prospects.