September 24, 2002
August 13, 2002
Statement·Presser·Minutes
AGAlan GreenspanSeptember 24, 2002 FOMC Statement
FOMC statement
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 suggests that aggregate demand is growing at a moderate pace.
Over time, the current accommodative stance of monetary policy, coupled with still robust underlying growth in productivity, should be sufficient to foster an improving business climate. However, considerable uncertainty persists about the extent and timing of the expected pickup in production and employment owing in part to the emergence of heightened geopolitical risks.
Nonetheless, Consequently, the Committee recognizes believes that, for the foreseeable future, against the background of its long run 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.
Voting for the FOMC monetary policy action were were: Alan Greenspan, Chairman; William J. McDonough, Vice Chairman; Ben S. Bernanke, Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jerry L. Jordan; Donald L. Kohn, Robert D. McTeer, Jr.; Kohn; Mark W. Olson; Anthony M. Santomero, and Gary H. Stern.
Voting against the action were: Edward M. Gramlich and Robert D. McTeer, Jr.
Governor Gramlich and President McTeer preferred a reduction in the target for the federal funds rate.
The softening in the growth of aggregate demand that emerged this spring has been prolonged in large measure by weakness in financial markets and heightened uncertainty related to problems in corporate reporting and governance.
The current accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, should be sufficient to foster an improving business climate over time.
Our summary
What changed
- The FOMC kept the federal funds rate target unchanged at 1 3/4 percent.
- The statement replaced the prior description of prolonged softening in demand with a view that aggregate demand is growing at a moderate pace.
- It added that considerable uncertainty persists about the pickup in production and employment, partly due to heightened geopolitical risks.
- The risk assessment remained tilted toward economic weakness, but the wording was slightly revised.
- The vote was no longer unanimous: Edward M. Gramlich and Robert D. McTeer, Jr. dissented, preferring a rate reduction.
Implications
The shift from describing softening demand to moderate growth suggests the FOMC sees less immediate downside from financial-market and corporate-governance issues, though geopolitical risks now cloud the outlook.
The dissents favoring a cut indicate internal pressure for easing, but the unchanged risk language implies the majority still sees the current stance as appropriate for now.
Summary generated automatically from the statements. Not investment advice.