The policy easings this year were undertaken to foster a turnaround in the economy and to help ensure a satisfactory expansion.
Longer-term rates also fell, on balance, over the first two months of the year, under the influence of monetary easings and prospects for lower inflation, especially when it became clear that the Gulf war would not interrupt oil supplies.
Interest rates generally declined during April, mainly at the short end, reflecting market participants' disappointment that the response to earlier monetary easings and to the rebound in consumer confidence they had expected had yet to show through in measures of economic activity.
These events, combined with a considerable easing of monetary policy, set the stage for a recovery, and a few sectors of the economy actually hit bottom quite early in the year.
Several factors worked to reduce outlays, including the easing of pressures on capacity, the diminished level of cash flow, and the general atmosphere of uncertainty related to events in the Persian Gulf Real spending for equipment plunged during the first quarter; measured in percentage terms, the decline was the sharpest quarterly falloff recorded in nearly eleven years.