2 October 2001, 22:24 Verbatim Text Of Federal Reserve Rate Cut Decision
The Federal Open Market Committee decided today to
lower its target for the federal funds rate by 50 basis points to 2-1/2
percent. In a related action, the Board of Governors approved a 50 basis
point reduction in the discount rate to 2 percent.
The terrorist attacks have significantly heightened uncertainty in an
economy that was already weak. Business and household spending as a
consequence are being further damped. Nonetheless, the long-term prospects
for productivity growth and the economy remain favorable and should become
evident once the unusual forces restraining demand abate.
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 Boston, New York, Cleveland, Richmond, Atlanta, St. Louis, Kansas City
and San Francisco.
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