December 11 · Published January 31, 2002
Statement·Presser·Minutes
AGAlan GreenspanDecember 11, 2001 FOMC Minutes
Our reading
The minutes are consistent with the statement because they document the FOMC's decision to lower the federal funds rate by 25 basis points to 1-3/4 percent, as stated, while also reflecting the same rationale—tentative signs of abating weakness, risks weighted toward economic weakness, and a favorable inflation outlook—that underpins the statement's language.
Our reading compares the minutes of the December 11 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Susan S. Bies
- Roger W. Ferguson, Jr.
- Edward M. Gramlich
- Alan Greenspan
- Thomas M. Hoenig ↑ dissented
- He preferred to leave the federal funds rate unchanged. He judged that a 2 percent federal funds rate was already quite stimulative and that a more stimulative policy was not needed. Following the rapid and aggressive policy actions already taken, it would be prudent to give the current policy more time to work through the economy. It was also his position that reducing the federal funds rate at this meeting could increase interest rate volatility by creating an expectation of a faster or a more aggressive reversal of policy.
- Edward W. Kelley, Jr.
- William J. McDonough
- Laurence H. Meyer
- Cathy E. Minehan
- Michael H. Moskow
- Mark W. Olson
- William Poole
From the minutes
FOMC minutes
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, January 29-30, 2002.
The meeting adjourned at 1:20 p.m.
Donald L. Kohn
Secretary
What changed from the previous meeting’s minutes
- The federal funds rate target was reduced by 25 basis points to 1-3/4 percent, versus 50 basis points to 2 percent previously.
- Mr. Hoenig dissented, preferring to leave the rate unchanged; no dissents occurred in the prior meeting.
- Ms. Bies and Mr. Olson joined the voting members; Mr. Kelley was absent and not voting.
- The minutes noted tentative signs of economic stabilization, a shift from the prior emphasis on continued contraction.
- The outlook for additional fiscal stimulus was seen as increasingly unlikely, versus previously diminished prospects.
- The statement retained the risk-weighted-to-weakness language but added a reference to signs of moderating weakness.
Summary generated automatically from the two documents.