February 1, 1995
November 15, 1994
Statement·Presser·Minutes
AGAlan GreenspanFebruary 1, 1995 FOMC Statement
FOMC statement
Discount rate and FOMC statement
FOMC statement
For immediate release
The Federal Reserve Board today approved an increase in the discount rate from 4 3/4 percent to 4 3/4 5 1/4 percent, effective immediately.
In a related move, the Federal Open Market Committee decided agreed that the this increase in the discount rate should be reflected fully in interest rates in the reserve markets.
Despite tentative signs of some moderation in growth, economic activity has continued to advance at a substantial pace, while resource utilization has risen further. In these circumstances, the Federal Reserve views these actions as necessary to keep inflation contained, and thereby foster sustainable economic growth.
In taking the discount rate action, the Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Richmond, Chicago, St. Louis, and Kansas City. City and San Francisco. The discount rate is the interest rate that is charged depository institutions when they borrow from their district Federal Reserve banks. Banks.
These measures were taken against the background of evidence of persistent strength in economic activity and high and rising levels of resource utilization. In these circumstances, the Federal Reserve views these actions as necessary to keep inflation contained, and thereby foster sustainable economic growth.
Our summary
What changed
- Raised the discount rate from 4 3/4 percent to 5 1/4 percent, effective immediately.
- Changed the FOMC's language from 'decided' to 'agreed' that the increase should be reflected fully in reserve market rates.
- Revised the economic outlook: now notes 'tentative signs of some moderation in growth' but still sees substantial advance and further rise in resource utilization, replacing the prior emphasis on persistent strength.
- Expanded the list of Federal Reserve Banks whose requests were approved, adding Boston, Richmond, Chicago, and San Francisco to the previous New York, St. Louis, and Kansas City.
Implications
The acknowledgment of tentative moderation suggests the FOMC is open to a slower pace of tightening, but the continued substantial growth and rising resource utilization justify another hike. Markets may read this as a signal that further increases are possible if inflation pressures persist, though the softer language hints at a potential pause if data cool.
Summary generated automatically from the statements. Not investment advice.