September 21 · Published November 11, 2004
Statement·Presser·Minutes
AGAlan GreenspanSeptember 21, 2004 FOMC Minutes
Our reading
The minutes read somewhat more dovish relative to the statement because they provide a more detailed and nuanced discussion of the economic outlook, emphasizing the uncertainties and risks that policymakers weighed when deciding on the rate hike. While the statement highlights the improvement in output growth and labor market conditions, the minutes elaborate on the "soft patch" in the economy, the cautious behavior of businesses regarding investment and hiring, and the potential downside risks to consumer spending and external demand. Additionally, the minutes reveal that policymakers saw the need for future policy actions to be increasingly data-dependent, suggesting a less predetermined or more flexible path for rate increases than the statement's language about "measured" pace might imply. This added context and emphasis on uncertainty and risks make the minutes appear more dovish relative to the relatively upbeat tone of the statement.
Our reading compares the minutes of the September 21 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
- Roger W. Ferguson, Jr.
- Timothy F. Geithner
- Edward M. Gramlich
- Alan Greenspan
- Thomas M. Hoenig
- Donald L. Kohn
- Cathy E. Minehan
- Mark W. Olson
- Sandra Pianalto
- William Poole
From the minutes
FOMC minutes
It was agreed that the next meeting of the Committee would be held on Wednesday, November 10, 2004.
The meeting adjourned at 1:15 p.m.
Vincent R. Reinhart
Secretary
What changed from the previous meeting’s minutes
- The FOMC noted output growth had moderated, whereas the previous minutes described solid expansion continuing through 2005.
- The FOMC raised the federal funds rate by 25 basis points to 1¾ percent, with the real rate turning slightly positive.
- The FOMC reported consumer spending rebounding in the third quarter, replacing the earlier description of a sharp slowdown.
- The FOMC observed energy prices declining from record levels, while the prior minutes anticipated energy costs leveling out.
- The FOMC mentioned the expiration of partial-expensing tax incentives could slow investment, a risk not in the previous minutes.
- The FOMC noted payroll growth improved in August after weak June and July, whereas the prior minutes saw gains falling back.
Summary generated automatically from the two documents.