January 31, 2006
December 13, 2005
Statement·Presser·Minutes·Policy
January 31, 2006 FOMC Statement
FOMC statement
FOMC statement
FOMC Statement
For immediate release
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/4 4-1/2 percent.
Despite elevated energy prices and hurricane-related disruptions, Although recent economic data have been uneven, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless, possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.
The Committee judges that some further measured policy firming is likely to may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Jeffrey M. Lacker; Mark W. Olson; Anthony M. Santomero; Sandra Pianalto; and Gary H. Stern. Janet L. Yellen.
In a related action, the Board of Governors unanimously approved a 25-basis point 25-basis-point increase in the discount rate to 5-1/4 5-1/2 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.
Our summary
What changed
- Raised the federal funds rate by 25 basis points to 4-1/2 percent, up from 4-1/4 percent.
- Changed the economic outlook from 'despite elevated energy prices and hurricane-related disruptions' to 'although recent economic data have been uneven'.
- Softened the forward guidance from 'some further measured policy firming is likely to be needed' to 'some further policy firming may be needed'.
- Approved a 25-basis-point increase in the discount rate to 5-1/2 percent, up from 5-1/4 percent.
- Voting members changed: Jack Guynn, Jeffrey M. Lacker, Sandra Pianalto, and Janet L. Yellen replaced Richard W. Fisher, Michael H. Moskow, Anthony M. Santomero, and Gary H. Stern.
Implications
The shift from 'likely' to 'may' in the policy guidance suggests the FOMC is less certain about the need for further rate hikes, possibly due to uneven data.
Markets may interpret this as a signal that the tightening cycle could be nearing an end, though the rate increase itself remains consistent with gradual normalization.
Summary generated automatically from the statements. Not investment advice.