March 21, 2000
February 2, 2000
Statement·Presser·Minutes
AGAlan GreenspanMarch 21, 2000 FOMC Statement
FOMC statement
FOMC statement and Board discount rate action
For immediate release
The Federal Open Market Committee voted today to raise its target for the federal funds rate by 25 basis points to 5-3/4 6 percent. In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 5-1/4 5-1/2 percent.
Economic conditions and considerations addressed by the Committee are essentially the same as when the Committee met in February. The Committee remains concerned that over time increases in demand will continue to exceed the growth in potential supply, even after taking account of the pronounced rise in productivity growth. Such trends which could foster inflationary imbalances that would undermine the economy's record economic expansion.
Against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks are weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future.
In taking the discount rate action, the Federal Reserve Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City and San Francisco. The discount rate is the rate charged depository institutions when they borrow short-term adjustment credit from their district Federal Reserve Banks.
Our summary
What changed
- Raised the federal funds rate target by 25 basis points to 6 percent, and the discount rate by 25 basis points to 5-1/2 percent.
- Noted that economic conditions and considerations are essentially the same as at the February meeting.
- Dropped the phrase 'even after taking account of the pronounced rise in productivity growth' from the demand-supply concern.
- Added the Federal Reserve Bank of Minneapolis to the list of banks whose discount rate requests were approved.
Implications
The statement signals continuity in the FOMC's assessment, with no change in the balance of risks or the underlying rationale for tightening. The removal of the productivity caveat may suggest a slightly less optimistic view of supply-side improvements, but the overall stance remains focused on containing inflation pressures.
Summary generated automatically from the statements. Not investment advice.