August 5 · Published August 26, 2008
Statement·Presser·Minutes
BBBen S. BernankeAugust 5, 2008 FOMC Minutes
Our reading
The minutes are consistent with the statement because they detail the FOMC's decision to hold the federal funds rate at 2 percent, reflecting the same assessment of economic conditions—weak growth prospects, strained financial markets, and elevated inflation concerns—that are summarized in the statement.
Our reading compares the minutes of the August 5 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Ben S. Bernanke
- Elizabeth A. Duke
- Richard W. Fisher ↑ dissented
- Because he favored an increase in the target federal funds rate to help restrain inflation and inflation expectations, which were at risk of drifting higher. While the financial system remained fragile and economic growth was sluggish and could weaken further, he saw a greater risk to the economy from upward pressures on inflation. In his view, businesses had become more inclined to raise prices to pass on the higher costs of imported goods and higher energy costs, the latter of which were well above their levels of late 2007. Accordingly, he supported a policy tightening at this meeting.
- Timothy F. Geithner
- Donald L. Kohn
- Randall S. Kroszner
- Frederic S. Mishkin
- Sandra Pianalto
- Charles I. Plosser
- Stern
- Kevin Warsh
From the minutes
FOMC minutes
Swap Authorization The Federal Open Market Committee directs the Federal Reserve Bank of New York to increase the amount available from the System Open Market Account under the existing reciprocal currency arrangement ("swap" arrangement) with the European Central Bank to an amount not to exceed $55 billion. Within that aggregate limit, draws of up to $25 billion are hereby authorized. The swap arrangement continues to be authorized through January 30, 2009, unless extended by the Federal Open Market Committee.
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Brian F. Madigan
Secretary
What changed from the previous meeting’s minutes
- The staff marked down its real GDP growth forecast for the second half of 2008 and 2009.
- The unemployment rate jumped during the intermeeting period, and payroll employment was expected to decline further.
- Oil and some other commodity prices declined over the intermeeting period.
- The FOMC extended the TSLF and PDCF authorizations until January 30, 2009.
- The FOMC authorized options on up to $50 billion in additional TSLF draws.
- The swap arrangement with the European Central Bank was increased to $55 billion.
Summary generated automatically from the two documents.