FOMC

[Doug Henwood]

[Fed funds - the rate at which banks lend each other money overnight 
- haven't been 2% since 1961; the discount rate hasn't been 1.5% 
since 1955. They're scared. And they've left the door open for more. 
Wall Street pays big money for that kind of Fed-watching analysis, 
and you get it here for free. All the more reason to send contribs to 
Village Station - Box 953, NY NY 10014-0704.]

<http://www.federalreserve.gov/boarddocs/press/general/2001/20011106/>

November 6, 2001

For immediate release

The Federal Open Market Committee decided today to lower its target 
for the federal funds rate by 50 basis points to 2 percent. In a 
related action, the Board of Governors approved a 50 basis point 
reduction in the discount rate to 1-1/2 percent.

Heightened uncertainty and concerns about a deterioration in business 
conditions both here and abroad are damping economic activity. For 
the foreseeable future, then, the Committee continues to believe 
that, against the background of its long-run goals of price stability 
and sustainable economic growth and of the information currently 
available, the risks are weighted mainly toward conditions that may 
generate economic weakness.

Although the necessary reallocation of resources to enhance security 
may restrain advances in productivity for a time, the long-term 
prospects for productivity growth and the economy remain favorable 
and should become evident once the unusual forces restraining demand 
abate.

In taking the discount rate action, the Federal Reserve Board 
approved the request submitted by the Board of Directors of the 
Federal Reserve Bank of Richmond.