April 30, 2008
March 18, 2008
Statement·Presser·Minutes
BBBen S. BernankeApril 30, 2008 FOMC Statement
FOMC statement
FOMC statement
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 75 25 basis points to 2-1/4 2 percent.
Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer remains weak. Household and business spending has slowed been subdued and labor markets have softened. softened further. Financial markets remain under considerable stress, and the tightening of tight credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters.
Inflation has been elevated, Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen. risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook has increased. remains high. It will be necessary to continue to monitor inflation developments carefully.
Today’s The substantial easing of monetary policy action, to date, combined with those taken earlier, including ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to monitor economic and financial developments and will act in a timely manner as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred less aggressive action no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 75-basis-point 25-basis-point decrease in the discount rate to 2-1/2 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, Cleveland, Atlanta, and San Francisco.
Our summary
What changed
- The FOMC lowered the federal funds rate by 25 basis points to 2 percent, a smaller cut than the previous 75-basis-point reduction.
- Economic activity is now described as 'weak' rather than 'weaker,' with household and business spending subdued and labor markets softening further.
- Core inflation readings have improved somewhat, but energy and commodity prices have increased, and inflation expectations have risen in recent months.
- The statement removed the explicit 'downside risks to growth remain' language, instead emphasizing that substantial easing to date should mitigate risks.
- The dissenting voters preferred no change in the target rate, rather than less aggressive action, and the discount rate was cut by 25 basis points to 2-1/4 percent.
Implications
The shift from 'downside risks to growth remain' to a more neutral monitoring stance suggests the FOMC sees less urgency for further cuts, possibly signaling a pause after this reduction.
Improved core inflation readings and the smaller rate cut indicate a balancing act between supporting growth and containing inflation expectations, which markets may interpret as a less dovish tilt.
Summary generated automatically from the statements. Not investment advice.