May 4, 2004
March 16, 2004
Statement·Presser·Minutes
AGAlan GreenspanMay 4, 2004 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 at 1 percent.
The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace. rate and hiring appears to have picked up. Although job losses incoming inflation data have slowed, new hiring has lagged. Increases in core consumer prices are muted and expected moved somewhat higher, long-term inflation expectations appear to remain low. have remained well contained.
The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal Similarly, the risks to that the goal of a rise in inflation. With price stability have moved into balance. At this juncture, with inflation quite low and resource use slack, the Committee believes that it policy accommodation can be patient in removing its policy accommodation. removed at a pace that is likely to be measured.
Voting for the FOMC monetary policy action actions were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.
Our summary
What changed
- The FOMC upgraded its labor market assessment, noting that hiring appears to have picked up, whereas the previous statement said new hiring had lagged.
- It acknowledged that incoming inflation data have moved somewhat higher, but noted long-term inflation expectations remain well contained.
- The risk assessment for price stability shifted from an unwelcome fall in inflation being almost equal to a rise, to risks being balanced.
- The FOMC replaced its pledge to be patient in removing accommodation with a commitment to remove it at a pace that is likely to be measured.
- The vote was unanimous and identical to the previous meeting, with all 12 members supporting the decision.
Implications
The shift from 'patient' to 'measured' pace signals that rate hikes are likely to begin soon, but at a gradual and predictable pace.
The balanced risk language and acknowledgment of higher inflation data suggest the FOMC is preparing markets for a tightening cycle, while emphasizing that long-term inflation expectations remain anchored.
Summary generated automatically from the statements. Not investment advice.