October 3, 2000
August 22, 2000
Statement·Presser·Minutes
AGAlan GreenspanOctober 3, 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 have indicated that the expansion of aggregate demand is moderating toward has moderated to a pace closer to the enhanced rate of growth of the economy's potential to produce. The data also have indicated that more rapid advances in productivity have been raising that potential growth rate as well as containing also continue to help contain costs and holding hold down underlying price pressures.
However, the utilization of the pool of available workers remains at an unusually high level. Moreover, the increase in energy prices, though having limited effect on core measures of prices to date, poses a risk of raising inflation expectations. The subdued behavior of those expectations so far has contributed importantly to maintaining an environment conducive to maximum sustainable growth.
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.
Nonetheless, the Committee remains concerned about the risk of a continuing gap between the growth of demand and potential supply at a time when the utilization of the pool of available workers remains at an unusually high level.
Our summary
What changed
- The FOMC maintained the federal funds rate target at 6-1/2 percent.
- Language shifted from demand moderating 'toward' a pace closer to potential to having 'moderated to' that pace, indicating more progress.
- The statement removed the explicit concern about a continuing demand-supply gap, replacing it with a focus on high worker utilization and energy price risks.
- Added that energy price increases pose a risk of raising inflation expectations, though core prices and expectations have been subdued so far.
Implications
The revised language suggests the FOMC sees less immediate demand pressure but is more attentive to energy-driven inflation risks, potentially keeping policy on hold while monitoring those risks. Markets might interpret the removal of the gap concern as a slightly less hawkish tone, but the added energy risk keeps the inflation bias intact.
Summary generated automatically from the statements. Not investment advice.