November 10, 2004
September 21, 2004
Statement·Presser·Minutes
AGAlan GreenspanNovember 10, 2004 FOMC Statement
FOMC statement
FOMC statement and Board discount rate action
For immediate release
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-3/4 2 percent.
The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. After moderating earlier this year partly in response Output appears to be growing at a moderate pace despite the substantial rise in energy prices, output growth appears to have regained some traction, and labor market conditions have improved modestly. Despite the rise in energy prices, inflation improved. Inflation and longer-term inflation expectations have eased in recent months. remain well contained.
The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation 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 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 unanimously approved a 25 basis point increase in the discount rate to 2-3/4 3 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. Kansas City.
Our summary
What changed
- Raised the federal funds rate target by 25 basis points to 2 percent.
- Upgraded the economic outlook: output growth is now described as moderate, and labor market conditions have improved (previously 'improved modestly').
- Changed inflation language: now says inflation and longer-term expectations 'remain well contained' (previously 'eased in recent months').
- Increased the discount rate by 25 basis points to 3 percent.
- The list of Federal Reserve Banks approving the discount rate request no longer includes Dallas and San Francisco.
Implications
The upgraded language on growth and labor markets, along with the continued emphasis on contained inflation, suggests the FOMC sees the economy on a firmer footing.
The unchanged risk assessment and the repeated commitment to a measured pace of policy removal indicate that further gradual rate hikes are likely, with the statement offering no signal of an accelerated or paused path.
Summary generated automatically from the statements. Not investment advice.