[lbo-talk] FOMC

[Doug Henwood]

[No change in policy, and the kept the reassuring phrase, "for a 
considerable period." But there was a shift in the wording on the 
balance of risks between inflation and deflation ("an unwelcome fall 
in inflation" in Fedspeak) - now they're equal. That sounds like 
they're beginning to prepare the markets for a policy shift, i.e., 
tightening, but slowly. The "considerable period" wording may 
disappear in the next release, though. Time to watch public 
statements of Fedsters very closely in the coming weeks for more 
signs of a shift.]

<http://www.federalreserve.gov/boarddocs/press/monetary/2003/20031209/default.htm>

Release Date: December 9, 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 robust underlying growth in 
productivity, is providing important ongoing support to economic 
activity. The evidence accumulated over the intermeeting period 
confirms that output is expanding briskly, and the labor market 
appears to be improving modestly. Increases in core consumer prices 
are muted and expected to remain low.

The Committee perceives that the upside and downside risks to the 
attainment of sustainable growth for the next few quarters are 
roughly equal. The probability of an unwelcome fall in inflation has 
diminished in recent months and now appears almost equal to that of a 
rise in inflation. However, with inflation quite low and resource use 
slack, the Committee believes that policy accommodation can be 
maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, 
Chairman; Timothy F. Geithner, Vice 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; and Robert T. Parry.