September 17, 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 today to lower its target for the federal funds rate by 25 50 basis points to 3-1/2 3 percent. In a related action, the Board of Governors approved a 25 50 basis point reduction in the discount rate to 3 2-1/2 percent. Today's action by The Federal Reserve will continue to supply unusually large volumes of liquidity to the FOMC brings financial markets, as needed, until more normal market functioning is restored. As a consequence, the decline in FOMC recognizes that the target actual federal funds rate since the beginning of the year to 300 basis points. may be below its target on occasion in these unusual circumstances.

Although Even before the tragic events of last week, employment, production, and business spending remained weak, and last week's events have the potential to damp spending further. Nonetheless, the long-term prospects for productivity growth and the economy remain favorable, favorable and should become evident once the unusual forces restraining demand abate. For the foreseeable future, 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. weakness.

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, Richmond, Chicago, Kansas City Minneapolis, Dallas, and Dallas. San Francisco.

Household demand has been sustained, but business profits and capital spending continue to weaken and growth 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.

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