August 22, 2000
June 28, 2000
Statement·Presser·Minutes
AGAlan GreenspanAugust 22, 2000 FOMC Statement
FOMC statement
FOMC statement
For immediate release
The Federal Open Market Committee at its meeting today decided to maintain the existing stance of monetary policy, keeping its target for the federal funds rate at 6-1/2 percent.
Recent data suggest have indicated that the expansion of aggregate demand may be is moderating toward a pace closer to the rate of growth of the economy's potential to produce. Although core measures of prices are rising slightly faster than a year ago, continuing The data also have indicated that more rapid advances in productivity have been raising that potential growth rate as well as containing costs and holding down underlying price pressures.
Nonetheless, signs that the Committee remains concerned about the risk of a continuing gap between the growth in of demand is moving to a sustainable pace are still tentative and preliminary, and potential supply at a time when the utilization of the pool of available workers remains at an unusually high level.
In these circumstances, and against Against the background of its long-term goals of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks continue to be weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future.
Our summary
What changed
- Kept the federal funds rate target at 6-1/2 percent, as in June.
- Upgraded the demand moderation assessment from 'may be moderating' to 'is moderating'.
- Noted that rapid productivity gains are raising the economy's potential growth rate, a new point.
- Changed the inflation risk wording from 'signs that growth in demand is moving to a sustainable pace are still tentative' to a direct concern about a demand-supply gap.
- Dropped the sentence about core prices rising slightly faster than a year ago.
Implications
The FOMC is more confident that demand is slowing, but it sees productivity as boosting supply potential, which could ease future inflation pressures. However, the persistent concern about a demand-supply gap and the unchanged risk assessment indicate that a rate hike remains on the table if inflation risks materialize. Markets may see a slightly more balanced outlook, but the tight labor market still points to a tightening bias.
Summary generated automatically from the statements. Not investment advice.