[lbo-talk] FOMC correction!

Doug Henwood dhenwood at panix.com
Tue May 3 13:10:25 PDT 2005


[never saw one of these before, and it's rather strange, since I'm sure they spend a lot of time obsessing over every comma in these statements - the **'d sentence (the addition) is in bold in the original - the **'s are mine, to preserve plain text - gotta wonder if they saw the market reaction and worried that they were sounding a tad too hawkish]

<http://www.federalreserve.gov/boarddocs/press/monetary/2005/20050503/>

May 3, 2005

For immediate release

(Note: Corrects previous release to add sentence in second paragraph, which was dropped inadvertently.)

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually. Pressures on inflation have picked up in recent months and pricing power is more evident. **Longer-term inflation expectations remain well contained.**

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.



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