January 31, 2007
December 12, 2006
Statement·Presser·Minutes·Policy
BBBen S. BernankeJanuary 31, 2007 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 5-1/4 percent.
Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market. Overall, the economy seems likely to expand at a moderate pace over coming quarters.
Readings on core inflation have been elevated, improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.
Nonetheless, the The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Cathy E. Minehan; Frederic S. Mishkin; Sandra Pianalto; Michael H. Moskow; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey Kevin M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting. Warsh.
Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.
Our summary
What changed
- The FOMC upgraded its economic assessment, noting firmer growth and tentative housing stabilization, replacing the prior description of slowing growth and a substantial housing cooling.
- It revised its inflation language, saying core inflation readings have improved modestly and pressures seem likely to moderate, dropping the earlier reference to elevated readings and specific moderating factors.
- The statement no longer mentions any dissents; the current vote was unanimous, with new participants Hoenig, Minehan, and Moskow replacing Pianalto, Poole, and Yellen.
- The rate decision remained unchanged at 5-1/4 percent, and the forward guidance on additional firming was kept identical.
Implications
The improved growth and inflation language suggests the FOMC sees less urgency for further tightening, though it retains the option to firm if the outlook changes.
The removal of the dissent and the unanimous vote may signal greater internal agreement on holding rates steady, which markets could interpret as a reduced near-term likelihood of a hike.
Summary generated automatically from the statements. Not investment advice.