[lbo-talk] FOMC leaves things alone

[Doug Henwood]

[still friendly sounds - worry about "an unwelcome fall in 
inflation," i.e., deflation - but the deflation worry seems to be 
passing, and it's probably only a coincidence that The Nation did a 
cover story on it just as the worry was about to fade - but the fact 
that the Fed is still saying this is their way of saying "We won't be 
raising rates for ages."]

<http://www.federalreserve.gov/boarddocs/press/monetary/2003/20030812/>

Release Date: August 12, 2003

For immediate release

The Federal Open Market Committee decided today to keep its target 
for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of 
monetary policy, coupled with still-robust underlying growth in 
productivity, is providing important ongoing support to economic 
activity. The evidence accumulated over the intermeeting period shows 
that spending is firming, although labor market indicators are mixed. 
Business pricing power and increases in core consumer prices remain 
muted.

The Committee perceives that the upside and downside risks to the 
attainment of sustainable growth for the next few quarters are 
roughly equal. In contrast, the probability, though minor, of an 
unwelcome fall in inflation exceeds that of a rise in inflation from 
its already low level. The Committee judges that, on balance, the 
risk of inflation becoming undesirably low is likely to be the 
predominant concern for the foreseeable future. In these 
circumstances, the Committee believes that policy accommodation can 
be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, 
Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; 
Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. 
Kohn; Michael H. Moskow; Mark W. Olson; Robert T. Parry; and Jamie B. 
Stewart, Jr.