[lbo-talk] FOMC

Doug Henwood dhenwood at panix.com
Tue Dec 9 11:31:48 PST 2003


[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.



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