' s spread ) rose modestly from the corresponding survey week of three months earlier. of particular importance for small businesses, however, are the facts that these spreads jumped significantly both on loans originated by smaller u. s. banks and on smaller commercial loans – that is, those loans below $ 100, 000. despite tighter credit standards and loan terms, growth in the dollar amount of commercial loans at u. s. banks was quite well maintained in the first quarter of 2008. particularly noteworthy from the point of view of small businesses is the fact that after growing almost 20 percent in the fourth quarter of 2007, commercial loans at small banks continued to expand at a rate of almost 12 percent in this year's first quarter. 3 thus, although slowing somewhat, commercial loan growth has held up in recent months even though banks'terms have tightened and economic growth has slowed, the latter driving down the demand for small business and other commercial loans. on balance, this suggests that credit is generally available, albeit at a higher cost. another source of information about small business credit supply conditions is the monthly survey of the national federation of independent businesses ( nfib ). the results of the most recent nfib survey, conducted in march, suggest that credit supply conditions for small businesses have held up fairly well over the past several months. for example, over the past few quarters only about 3 percent of survey respondents have reported that financing conditions and interest rates were their main business concern, and for march that number was only 2 percent. 4 in addition, according to the nfib survey, the average short - term interest rate paid by borrowers has remained at the low end of its historical range. on a less board of governors of the federal reserve system ( 2008 ), " the january 2008 senior loan officer opinion survey on bank lending practices " ( january ). in october, a net 10 percent of banks reported tightening lending standards to smaller firms. the net percent of banks is defined as the percent tightening less the percent easing standards. the first quarter's numbers have been adjusted for some statistical anomalies in february. these levels are far below their peaks of the early 1980s, when more than one - third of respondents reported that financing conditions were their main concern. positive note, in recent months the net percentage of nfib survey respondents that reported credit was harder to obtain over the previous three months and the net percentage that expected credit conditions to tighten over the next three months have been at the upper end

greater momentum in the prospects for economic growth or to a rapid escalation in inflation, then the case for further monetary policy easing might have seemed less pressing. however, such was not the case. the federal reserve publishes a summary of economic projections ( sep ) four times a year in conjunction with the fomc minutes. as shown in the november sep, most committee participants anticipated that the economy would recover only gradually and projected that the unemployment rate would still be at around 8 percent at the end of 2012 – an outlook that is shared by most outside forecasters. similarly, committee participants generally expected inflation to rise very gradually toward levels consistent with the federal reserve ’ s mandate. moreover, continuing downside risks to the outlook for economic activity and inflation strengthened the case for providing additional monetary policy accommodation, thereby reducing the risk of another downturn in economic activity or a further decline in inflation. the design of the asset purchase program in weighing its policy options last autumn, the committee gave careful consideration to the question of whether further purchases of longer - term treasury securities were likely to be effective in fostering economic recovery and bringing inflation back up to levels judged to be consistent with the dual mandate. 3 in my judgment, both theoretical analysis and empirical evidence suggested that such purchases could provide effective stimulus by keeping longerterm interest rates lower than they would otherwise be. this downward trend in inflation has not been confined to any specific sectors of the economy, such as housing. for example, the federal reserve bank of dallas constructs a trimmed - mean rate of pce inflation by removing the tails of the distribution of monthly price changes for disaggregated spending categories. that measure of underlying inflation has also declined fairly steadily since mid - 2008 and dipped slightly below 1 percent last autumn. moreover, diffusion indexes of price changes – which subtract the percentage of items in the consumption basket with price increases from the percentage of items with price decreases – also fell noticeably over this period, providing further evidence that the decline in inflation has been widespread across many categories of consumer spending. as indicated in the minutes of the november fomc meeting, the committee has also considered the potential costs and benefits of setting a peg for a term interest rate. while targeting the yield on a term security could be an effective way to reduce longer - term interest rates, such an approach might require the federal reserve to make an open - ended commitment to purchasing longer - term securities. bis central bankers ’ speeches the underlying theory, in which asset prices