November 15, 2000 FOMC Statement

Target rate 6.50% unchanged Vote 10–0 Tone: Leaning hawkish +0.50

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.

~~However, the~~ The utilization of the pool of available workers remains at an unusually high ~~level. Moreover,~~ level, and the increase in energy prices, though having limited effect on core measures of prices to date, ~~poses a risk~~ still harbors the possibility of raising inflation expectations. The ~~subdued behavior of those expectations so far has contributed importantly~~ Committee, accordingly, continues to ~~maintaining an environment conducive~~ see a risk of heightened inflation pressures. However, softening in business and household demand and tightening conditions in financial markets over recent months suggest that the economy could expand for a time at a pace below the productivity-enhanced rate of growth of its potential to ~~maximum sustainable growth.~~ produce.

~~Against~~ Nonetheless, to date the easing of demand pressures has not been sufficient to warrant a change in the Committee's judgment that against the background of its ~~long-term~~ long-run 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.

Recent data have indicated that the expansion of aggregate demand has moderated to a pace closer to the enhanced rate of growth of the economy's potential to produce. The more rapid advances in productivity also continue to help contain costs and hold down underlying price pressures.

Source

Our summary

What changed

The FOMC kept the federal funds rate target at 6-1/2 percent, unchanged from the previous meeting.
The statement dropped the reference to aggregate demand moderating to a pace closer to potential growth and the productivity gains containing costs.
It added that softening business and household demand and tighter financial conditions could lead to below-potential growth for a time.
The FOMC now says easing demand pressures have not yet been sufficient to change its inflation-risk judgment, which remains tilted toward higher inflation.
The language on labor utilization and energy price risks was consolidated, with energy still seen as a potential source of inflation expectations.

Implications

The revised language acknowledges downside growth risks from softer demand and tighter financial conditions, but the FOMC still sees inflation risks as dominant.

The statement suggests the FOMC is monitoring whether demand easing will be enough to reduce inflation pressures before considering any policy shift.

Markets may read the added growth-risk language as a slight dovish tilt, though the unchanged inflation-risk bias keeps the stance firmly neutral.

Summary generated automatically from the statements. Not investment advice.