Members of the Federal Reserve's monetary policy committee are concerned that rising foreclosures and the huge supply of unsold homes on the market could put additional downward pressure on house prices and lead to "further disruptions in the financial markets."The minutes of the Dec. 11 Federal Open Market Committee also reveal that members did not expect that the housing market would continue to deteriorate after their last meeting on Oct. 31 or that the reduced availability of jumbo mortgages would last so long. The FOMC members "agreed that the housing correction was likely to be both deeper and more prolonged than they had anticipated in October," the Dec. 11 minutes say. The committee voted to lower the target federal funds rate 25 basis points to 4.25%. But Boston Federal Reserve Bank president Eric Rosengren advocated a more aggressive cut due to a "deteriorating housing sector, slowing consumer and business spending, high energy prices, and ill-functioning financial markets."

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