July 6, 1995 FOMC Statement

Target rate 5.75% ▼ cut 0.25 pp Vote 10–1 · Dissents: Hoenig ↑ Tone: Clearly dovish -0.81

FOMC statement

FOMC statement ~~Discount rate and FOMC statement~~

For immediate release

Chairman Alan Greenspan announced today that the Federal Open Market Committee decided to decrease slightly the degree of pressure on bank reserve positions.

As a result of the monetary tightening initiated in early 1994, inflationary pressures have receded enough to accommodate a modest adjustment in monetary conditions.

Today's action will be reflected in a 25 basis point decline in the federal funds rate from about 6 percent to about 5-3/4 percent.

~~The Federal Reserve Board today approved an increase in the discount rate from 4 3/4 percent to 5 1/4 percent, effective immediately.~~

~~In a related move, the Federal Open Market Committee agreed that this increase 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 action, the Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Richmond, Chicago, St. Louis, Kansas 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.

Source

Our summary

What changed

The FOMC decreased the degree of pressure on bank reserve positions, easing monetary conditions.
The fed funds target was lowered by 25 basis points from about 6 percent to 5-3/4 percent.
The statement cites receding inflationary pressures as justification for the modest adjustment.
No longer references raising the discount rate or related reserve market moves from the previous statement.
The economic outlook language shifts from robust growth to acknowledging moderation in inflation pressures.

Implications

The easing suggests the FOMC sees reduced inflation risk and may tolerate a slight loosening without endangering its goals.

Markets may interpret this as a pivot toward a less restrictive stance, potentially signaling a period of policy stability or further gradual adjustments depending on data.

Summary generated automatically from the statements. Not investment advice.