15 May 2001, 22:50 Full text of FOMC statement
WASHINGTON (AFX) - The full text of the Federal Open Market
Committee follows:
The Federal Open Market Committee at its meeting today decided to
lower its target for the federal funds rate by 50 basis points to 4
percent. In a related action, the Board of Governors approved a 50
basis point reduction in the discount rate to 3-1/2 percent.
A significant reduction in excess inventories seems well advanced.
Consumption and housing expenditures have held up reasonably well,
though activity in these areas has flattened recently. Investment in
capital equipment, however, has continued to decline. The erosion in
current and prospective profitability, in combination with considerable
uncertainty about the business outlook, seems likely to hold down
capital spending going forward. This potential restraint, together with
the possible effects of earlier reductions in equity wealth on
consumption and the risk of slower growth abroad, continues to weigh on
the economy.
With pressures on labor and product markets easing, inflation is
expected to remain contained. Although measured productivity growth
stalled in the first quarter, the impressive underlying rate of
increase that developed in recent years appears to be largely intact,
supporting longer-term prospects.
The Committee continues to believe that against the background of
its long-run goals of price stability and sustainable economic growth
and of the information currently available, the risks are weighted
mainly toward conditions that may generate economic weakness in the
foreseeable future.
In taking the discount rate action, the Federal Reserve Board
approved requests submitted by the Boards of Directors of the Federal
Reserve Banks of New York, Richmond, Chicago, St. Louis and San
Francisco.
© 1999-2024 Forex EuroClub
All rights reserved