The document summarizes a presentation given at the Federal Reserve Bank of New York on November 20, 2009. The presentation covered global and domestic economic conditions, the real estate crisis, financial markets, monetary policy challenges, a monetary policy recommendation, and a draft FOMC policy directive. The presentation considered three potential economic recovery scenarios - a rapid "V-shaped" recovery, a slow "L-shaped" recovery, or a double-dip "W-shaped" recovery. The recommendation was to maintain the target federal funds rate at 0-0.25% at the next FOMC meeting.

1. Federal Reserve Challenge PresentationFederal Reserve Bank of New York – November 20, 2009

2. AgendaGlobal Economic Conditions

3. Domestic Economic Conditions

4. The Real Estate Crisis

5. Financial Markets

6. Forecast

7. Contemporary Monetary Policy Challenges

8. Monetary Policy Recommendation

9. Draft FOMC Policy Directive

10. Question & Answer SessionFederal Reserve Challenge

11. International Economic ConditionsSource: International Monetary FundFederal Reserve Challenge

12. International Economic ConditionsFederal Reserve Challenge

13. International Economic ConditionsSource: U.S. Department of Commerce Bureau of Economic Analysis, U.S. Census BureauFederal Reserve Challenge

14. International Economic ConditionsSource: Netherlands Bureau of Economic Policy AnalysisFederal Reserve Challenge

15. International Economic ConditionsAmounts OutstandingSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

16. International Economic ConditionsSource: U.S. Census Bureau, Office of Management and BudgetFederal Reserve Challenge

17. International Economic ConditionsSources: European Central Bank, Norges Bank, Sveriges Riksbank, Central Bank of Russia, People’s Bank of ChinaKorea Federation of Banks, Financial TimesFederal Reserve Challenge

18. International Economic ConditionsSource: U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

19. International Economic ConditionsSource: Federal Reserve Bank of St. Louis, Federal Reserve Bank of New YorkFederal Reserve Challenge

20. International Economic ConditionsUp 0.25%Up 0.25%Up 0.25%Source: Norges Bank, Reserve Bank of Australia, Bank of IsraelFederal Reserve Challenge

21. International Economic ConditionsCentral Bank CooperationFederal Reserve Challenge

22. International Economic ConditionsSource:Organization for Economic Cooperation & DevelopmentFederal Reserve Challenge

23. Domestic Economic ConditionsSource: U.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

24. Domestic Economic ConditionsSource: U.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

25. Domestic Economic ConditionsSource: U.S. Department of Labor Bureau of Labor Statistics, Automatic Data ProcessingFederal Reserve Challenge

26. Domestic Economic ConditionsSource: U.S. Department of Labor :Bureau of Labor StatisticsFederal Reserve Challenge

27. Domestic Economic ConditionsMonthly Mass LayoffsSource: U.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

28. Domestic Economic ConditionsEmployment Cost Index (%∆quarterly)Source: U.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

29. Domestic Economic ConditionsSource: U.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

30. Domestic Economic ConditionsSource: U.S. Department of Commerce: Bureau of Economic AnalysisFederal Reserve Challenge

31. Domestic Economic ConditionsSource: U.S. Department of Commerce Census BureauSource: U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

32. Domestic Economic ConditionsSource: U.S. Department of Commerce: Bureau of Economic AnalysisFederal Reserve Challenge

33. Domestic Economic ConditionsSource: U.S. Department of Commerce: Bureau of Economic AnalysisFederal Reserve Challenge

34. Domestic Economic ConditionsSources: The Conference Board, University of Michigan Survey Research CenterFederal Reserve Challenge

35. Domestic Economic ConditionsSource: U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

36. Domestic Economic ConditionsSource: U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

37. Domestic Economic ConditionsNon-residential Investment % Contribution to GDP GrowthSource: U.S. Department of Commerce Bureau of Economic Analysis, Bureau of the CensusFederal Reserve Challenge

38. Domestic Economic ConditionsSources: Congressional Budget Office, U.S. Department of Labor Bureau of Labor Statistics, U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

39. Domestic Economic ConditionsInventory to Sales RatioSource: U.S. Department of Commerce Bureau of Economic Analysis, Bureau of the CensusFederal Reserve Challenge

40. Domestic Economic ConditionsFederal Reserve Board (G.17) Institute for Supply ManagementFederal Reserve Challenge

41. Domestic Economic ConditionsU.S. Department of Labor: Bureau of Labor StatisticsFederal Reserve Challenge

42. Domestic Economic ConditionsCore Inflation (%∆ y/y)Source: U.S. Department of Labor: Bureau of Labor Statistics, U.S. Department of Commerce: Bureau of Economic AnalysisFederal Reserve Challenge

43. Domestic Economic ConditionsSource: Federal Reserve Board (H.3, H.6)Federal Reserve Challenge

44. Real Estate MarketsSource: U.S. Department of Commerce Bureau of Economic AnalysisFederal Reserve Challenge

45. Real Estate MarketsSources: U.S. Department of Commerce: Census BureauFederal Reserve Challenge

46. Real Estate MarketsSource: National Association of Realtors Federal Reserve Challenge

47. Real Estate MarketsSource: Federal Home Loan Mortgage CorporationFederal Reserve Challenge

48. Real Estate MarketsSource: U.S. Department of Commerce, CensusBureauFederal Reserve Challenge

49. Real Estate MarketsSource: Standard and PoorsFederal Reserve Challenge

50. Real Estate MarketsSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

51. Real Estate MarketsSource: Federal Deposit Insurance CorporationFederal Reserve Challenge

52. Financial Markets1 Month OIS /LIBOR SpreadSource: Reuters, Chicago Board of TradeFederal Reserve Challenge

53. Financial MarketsSource: Federal Reserve Bank of New York, ReutersFederal Reserve Challenge

54. Financial MarketsSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

55. Financial MarketsSource: ReutersFederal Reserve Challenge

56. Financial MarketsSource: Federal Deposit Insurance CorporationFederal Reserve Challenge

57. Financial MarketsSource: Federal Reserve Bank of St. Louis Federal Reserve Challenge

58. Financial MarketsSource: Federal Reserve Board Federal Reserve Challenge

59. Financial MarketsSource: U.S. Department of Commerce Bureau of Economic Analysis, Federal Reserve Board (G.19)Federal Reserve Challenge

60. Financial MarketsSource: Federal Reserve Bank of St. Louis, U.S. Department of the TreasuryFederal Reserve Challenge

61. Financial MarketsFederal Reserve Challenge

62. Financial MarketsSource: Federal Reserve Bank of St. Louis Federal Reserve Challenge

63. Financial MarketsSource: Federal Reserve Bank of St. Louis Federal Reserve Challenge

64. Financial MarketsSource: Federal Reserve Board, Macroeconomic Advisers, Haver AnalyticsFederal Reserve Challenge

65. Monetary Policy DiscussionGDP (%∆y/y)Unemployment Rate (%)Core PCE DeflatorSource: Macroeconomic AdvisorsFederal Reserve Challenge

66. Monetary Policy Discussion27% of ARRA Aggregate DemandFederal Reserve Challenge

67. Monetary Policy DiscussionSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

68. BlockageOpeningBanksFed FacilitiesLiborCommercial & IndustrialConsumer, Mortgage LoansDepositsBanks w/Excess LoanDemandCommercial, Consumer,Mortgage LoansSavers &InvestorsSecurities-FundedLendingBorrowersFinancial-Issued ABSCommercial Paper & BondsDirect InvestmentCommercial Paper, BondsSecuritiesMarket

69. Monetary Policy DiscussionSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

70. BlockageOpeningAction to Revive the Commercial Paper Market: …To Temporarily Inserting Two BypassesCommercial, Consumer,Mortgage LoansSavers &InvestorsSecurities-Funded LoanOriginatorsBorrowersABS PaperTreasuriesFed &TreasuryCommercial PaperCommercial Paper ABSInsuranceDirectly Buy Commercial PaperCommercial Paper (Direct)SecuritiesMarketMoney Market FundsBuy Commercial Paper

71. Monetary Policy DiscussionSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge

72. Monetary Policy DiscussionSource: Federal Reserve Board (H.4.1)Federal Reserve Challenge