U.S. Federal Open Market Committee Statement: Full Text
By Washington newsroom
Washington, May 15 (Bloomberg) -- The following is the full text of the statement
released today by the Federal Reserve:
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 Francisc |
