November 6, 2002
September 24, 2002
Statement·Presser·Minutes
AGAlan GreenspanNovember 6, 2002 FOMC Statement
FOMC statement
FOMC statement and Board discount rate action
FOMC statement
For immediate release
The Federal Open Market Committee decided today to keep lower its target for the federal funds rate unchanged at by 50 basis points to 1 1/4 percent. In a related action, the Board of Governors approved a 50 basis point reduction in the discount rate to 3/4 percent.
The Committee continues to believe that an accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, is providing important ongoing support to economic activity. However, incoming economic data have tended to confirm that greater uncertainty, in part attributable to heightened geopolitical risks, is currently inhibiting spending, production, and employment. Inflation and inflation expectations remain well contained.
Consequently, In these circumstances, the Committee believes that, for that today's additional monetary easing should prove helpful as the foreseeable future, economy works its way through this current soft spot. With this action, the Committee believes 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. balanced with respect to the prospects for both goals in the foreseeable future.
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; Kohn, Robert D. McTeer, Jr.; Mark W. Olson; Anthony M. Santomero, and Gary H. Stern.
In taking the discount rate action, the Federal Reserve Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Dallas and New York.
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.
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.
Our summary
What changed
- The FOMC lowered the federal funds rate target by 50 basis points to 1 1/4 percent, and the Board approved a 50 basis point cut in the discount rate to 3/4 percent.
- Language shifted from noting moderate growth and expected improvement to stating that incoming data confirm uncertainty is inhibiting spending, production, and employment.
- The risk assessment moved from being weighted toward economic weakness to balanced with respect to both price stability and sustainable growth goals.
- The vote was unanimous for the action, with no dissents recorded; Gramlich and McTeer joined the majority, and the discount rate was approved for Dallas and New York.
- The previous statement's mention of potential weakness and dissenting preferences for a cut was removed, reflecting the decision to ease.
Implications
The shift to a balanced risk assessment, coupled with the rate cut, suggests the FOMC views the easing as sufficient to address current softness without signaling further moves.
Markets may interpret the unanimous vote and explicit mention of contained inflation as reducing the likelihood of aggressive near-term tightening, while the emphasis on geopolitical uncertainty leaves room for future adjustment if conditions worsen.
Summary generated automatically from the statements. Not investment advice.