March 19, 2002 FOMC Statement

Target rate 1.75% unchanged Vote 10–0 Tone: Balanced -0.08

FOMC statement

For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate unchanged at 1-3/4 percent.

The information that has become available since the last meeting of the Committee indicates that the economy, bolstered by a marked swing in inventory investment, is expanding at a significant pace. Nonetheless, the degree of the strengthening in final demand over coming quarters, an essential element in sustained economic expansion, is still uncertain.

~~The degree~~ In these circumstances, although the stance of ~~any strength in business capital and household spending, however,~~ monetary policy is ~~still uncertain. Hence,~~ currently accommodative, the Committee ~~continues to believe~~ believes that, for the foreseeable future, 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~~ balanced with respect to the ~~foreseeable future.~~ prospects for both goals.

The Committee decided to include in its announcements following its meetings the roll call of the vote on the federal funds rate target, including the preferred policy choice of any dissenters. This action accelerates the release of this information, currently available in the Minutes with a lag. To conform to this new practice, the Board of Governors also decided to report in the written announcement the roll call of any vote on the discount rate, also including the preferred policy choice of any dissenters.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; William J. McDonough, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jerry L. Jordan; Robert D. McTeer, Jr.; Mark W. Olson; Anthony M. Santomero, and Gary H. Stern.

Signs that weakness in demand is abating and economic activity is beginning to firm have become more prevalent. With the forces restraining the economy starting to diminish, and with the long-term prospects for productivity growth remaining favorable and monetary policy accommodative, the outlook for economic recovery has become more promising.

Source

Our summary

What changed

The FOMC kept the federal funds rate target unchanged at 1-3/4 percent.
The economic outlook language shifted from describing signs of firming activity to stating the economy is expanding at a significant pace, bolstered by a marked swing in inventory investment.
The risk assessment changed from risks weighted mainly toward economic weakness to risks balanced with respect to both price stability and sustainable growth.
The statement added a new practice of including the roll call of the vote on the federal funds rate target, with the Board of Governors also reporting discount rate votes.
The statement now includes the voting list, with all ten members voting for the action.

Implications

The shift to balanced risks suggests the FOMC sees less immediate threat of economic weakness, potentially reducing the likelihood of near-term rate cuts.

The new vote disclosure practice increases transparency, which markets may view as a commitment to clearer communication of policy deliberations.

The emphasis on uncertainty in final demand indicates the FOMC remains cautious about the durability of the expansion, leaving room for policy adjustments if data disappoint.

Summary generated automatically from the statements. Not investment advice.