August 21, 2001
June 27, 2001
Statement·Presser·Minutes
AGAlan GreenspanAugust 21, 2001 FOMC Statement
FOMC statement
FOMC statement and Board discount rate action
For immediate release
The Federal Open Market Committee at its meeting today decided to lower its target for the federal funds rate by 25 basis points to 3-3/4 3-1/2 percent. In a related action, the Board of Governors approved a 25 basis point reduction in the discount rate to 3-1/4 3 percent. Today's action by the FOMC brings the decline in the target federal funds rate since the beginning of the year to 275 300 basis points.
The patterns evident in recent months--declining profitability and Household demand has been sustained, but business profits and capital spending, weak expansion of consumption, spending continue to weaken and slowing growth abroad--continue to weigh abroad is slowing, weighing on the U.S. economy. The associated easing of pressures on labor and product markets is expected to keep inflation contained.
Although continuing favorable trends bolster long-term prospects for productivity growth and the economy, economy remain favorable, the Committee continues to believe that against the background of its long-run goals of price stability and sustainable economic growth and of the information currently available, the risks are weighted mainly toward conditions that may generate economic weakness 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, Atlanta, Richmond, Chicago, Dallas Kansas City and San Francisco. Dallas.
Our summary
What changed
- The FOMC lowered the federal funds rate target by 25 basis points to 3-1/2 percent, and the discount rate by 25 basis points to 3 percent.
- The cumulative decline in the federal funds rate target since the start of the year is now 300 basis points, up from 275 basis points.
- The economic outlook language shifted: household demand is now described as sustained, while business profits, capital spending, and growth abroad continue to weaken.
- The list of Federal Reserve Banks whose discount rate requests were approved changed, adding Richmond and Kansas City and dropping Atlanta and San Francisco.
Implications
The revised language suggests the FOMC sees a slightly more resilient consumer sector but persistent weakness in business investment and external demand, reinforcing its easing bias.
The unchanged risk assessment—weighted toward economic weakness—implies further rate cuts remain possible if conditions deteriorate, though the statement offers no explicit forward guidance.
Summary generated automatically from the statements. Not investment advice.