May 15 · Published June 28, 2001
Statement·Presser·Minutes
AGAlan GreenspanMay 15, 2001 FOMC Minutes
Our reading
The minutes read somewhat more dovish relative to the statement because they reveal a deeper and more nuanced discussion of the downside risks, including concerns about prolonged economic weakness, fragile business and consumer confidence, and the possibility of a weaker or delayed upturn, while also acknowledging internal dissent and debate over the appropriate size of the rate cut.
Our reading compares the minutes of the May 15 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Roger W. Ferguson, Jr.
- Edward M. Gramlich
- Alan Greenspan
- Thomas M. Hoenig ↑ dissented
- He preferred a less aggressive easing action involving a reduction of 25 basis points in the federal funds rate. While the risks of weaker economic growth still tended to dominate those of rising inflation and called for some further easing, the Committee had added significant liquidity to the economy this year through its cumulatively large easing actions. The lagged effects of those actions should be felt increasingly over time. Moreover, following the rapid and aggressive policy actions already taken, a more cautious policy move at this point would in his view appropriately limit the risks of producing an overly accommodative policy stance and rising inflation over time.
- Edward W. Kelley, Jr.
- William J. McDonough
- Laurence H. Meyer
- Cathy E. Minehan
- Michael H. Moskow
- William Poole
From the minutes
FOMC minutes
Donald L. Kohn
Secretary
Footnotes
1. Attended portion of meeting relating to staff briefings. Return to text
What changed from the previous meeting’s minutes
- Federal funds rate target reduced from 5 percent to 4 percent, a 50 basis point cut.
- Mr. Hoenig dissented, preferring a 25 basis point reduction instead of 50.
- Risks statement changed from "risks are weighted mainly toward" to "risks continue to be weighted mainly toward" weakness.
- Members noted core inflation measures edging higher, a concern absent in previous minutes.
- Committee discussed possible shift to neutral risks statement before clear growth evidence emerged.
- Next meeting scheduled for June 26-27, 2001, instead of May 15.
Summary generated automatically from the two documents.