June 24–25 · Published August 14, 2003
Statement·Presser·Minutes·Policy
AGAlan GreenspanJune 24–25, 2003 FOMC Minutes
Our reading
The minutes read as more dovish because they explicitly detail the FOMC's internal debate and rationale, revealing a stronger emphasis on downside risks—such as the threat of "substantial further disinflation" and the persistence of economic slack—whereas the statement's language is more balanced and forward-looking, highlighting "firming" conditions and equal upside/downside risks to growth.
Our reading compares the minutes of the June 24–25 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Ben S. Bernanke
- Susan S. Bies
- J. Alfred Broaddus, Jr.
- Roger W. Ferguson, Jr.
- Edward M. Gramlich
- Alan Greenspan
- Jack Guynn
- Donald L. Kohn
- Michael H. Moskow
- Mark W. Olson
- Robert T. Parry ↓ dissented
- Mr. Parry dissented because he preferred a 50 basis point reduction in the federal funds rate target as insurance against continued sluggishness in economic activity and further declines in inflation measures to undesirably low rates. While he believed that a significant increase in the pace of activity over the next several quarters was likely, he had not yet seen convincing evidence that this process was under way. Moreover, the current slack in labor and product markets was likely to persist for some time even with a significant pickup in real GDP growth, and this prospect threatened to reduce inflation further. Finally, recent declines in inflation expectations had raised the real federal funds rate. In order to offset that increase and provide additional stimulus, he saw a 50 basis point reduction in the rate as desirable.
- Jamie B. Stewart, Jr.
From the minutes
FOMC minutes
Secretary
Footnotes
1. Attended portion of meeting relating to the discussion of the conduct of monetary policy in a period of very low interest rates. Return to text
2. Attended portion of meeting relating to the discussion of economic developments. Return to text
What changed from the previous meeting’s minutes
- The federal funds rate target was reduced from 1.25 percent to 1 percent.
- The vote was 11 to 1, with Mr. Parry dissenting in favor of a 50 basis point cut.
- The FOMC's press statement added a reference to signs of firming economic activity.
- The central tendency for 2003 real GDP growth was projected at 2.5 to 2.75 percent.
- The central tendency for 2004 unemployment was projected at 5.5 to 6 percent.
- The next meeting was scheduled for August 12, 2003, instead of June 24-25.
Summary generated automatically from the two documents.