**MNI POLICY: FOMC Cuts IOER by 5bp; Inflation Below Target>

--Sets IOER At 2.35%, 15 bps Below Top of Target Range

--Reaffirms 'Patient' Guidance Amid Global Risks, Muted Infl

--Headline, Core Inflation Running Below 2%

By Jean Yung

     WASHINGTON (MNI) - The following are the key points from the 

FOMC statement released Wednesday:

     --The FOMC lowered the interest rate paid on required and excess 

reserves (IOER) to 2.35%, 15 basis points below the top of its target 

range, explaning in a note that the move "is intended to foster trading 

in the federal funds market at rates well within the FOMC's target 

range." The effective fed funds rate had risen quickly in recent days to 

2.45%, just 5 bps below the top of the target range. This is the third 

so-called technical adjustment the Fed has made to its administered rate 

to keep its benchmark short-term rate well within the target range. 

     --The FOMC reaffirmed its "patient" stance on policy, again 

citing "global economic and financial developments and muted inflation 

pressures," and voted to hold the target range steady at 2.25% to 

2.50%. No dissents. 

     --Officials noted that both headline and core inflation "have 

declined and are running below" 2%. Core PCE inflation has weakened 

over the past few months to 1.6% y/y in March. 

     --Economic activity rose at a "solid" rate, an upgrade from March, 

but growth of household spending and business fixed investment slowed in 

the first quarter, the FOMC said. 

--MNI Washington Bureau, Tel: +1 202-371-2121; email: dcoffice@marketnews.com

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