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He stated that the Federal Reserve would continue to carefully monitor the economic situation. "The Federal Open Market Committee will be monitoring inflation developments closely for any sign that our longer-run objective of promoting price stability is threatened. At the same time, we also need to continue to carefully assess whether, after a period of near-term softness in economic activity, the economy is likely to be on-track for sustained economic expansion over time" said Kohn.

Despite the current tightening of credit markets and the uncertain performance of the U.S. economy, Kohn said that monetary policy would evolve with the economy and that it would strengthen in 2009. "With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation over the medium term. But a large measure of uncertainty surrounds that judgment and as the economy evolves so will the appropriate stance of policy," said Kohn.  (Mortgage Daily News)