June 30, 2004 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 raise its target for the federal funds rate at 1 by 25 basis points to 1-1/4 percent.

The Committee continues to believe that an accommodative believes that, even after this action, the stance of monetary policy, policy remains accommodative and, 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 rate pace and hiring appears to labor market conditions have picked up. improved. Although incoming inflation data have moved are somewhat higher, long-term inflation expectations appear elevated, a portion of the increase in recent months appears to have remained well contained. been due to transitory factors.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with With underlying inflation low and resource use slack, still expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy actions action 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.

In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 2-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.

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