ACTION BY THE FEDERAL OPEN MARKET COMMITTEE AND A DECREASE IN THE DISCOUNT RATE.The Federal Open Market Committee decided on April 18, 2001, to lower its target for the federal funds rate Federal Funds Rate The interest rate at which a depository institution lends immediately available funds (balances at the Federal Reserve) to another depository institution overnight. by 50 basis points to 41/2 percent. In a related action, the Board of Governors approved a 50 basis point reduction in the discount rate to 4 percent. The FOMC See Federal Open Market Committee. FOMC See Federal Open Market Committee (FOMC). has reviewed prospects for the economy in light of the information that has become available since its March meeting. 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 flat·ten v. flat·tened, flat·ten·ing, flat·tens v.tr. 1. To make flat or flatter. 2. To knock down; lay low: The boxer was flattened with one punch. recently. Although measured productivity probably weakened in the first quarter, the impressive underlying rate of increase that developed in recent years appears to be largely intact. Nonetheless, capital investment has continued to soften and the persistent erosion in current and expected profitability, in combination with rising uncertainty about the business outlook, seems poised to dampen capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. 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, threatens to keep the pace of economic activity unacceptably weak. As a consequence, the Committee agreed that an adjustment in the stance of policy is warranted during this extended intermeeting period. 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 Boston is a town in Erie County, New York, United States. The population was 7,897 at the 2000 census. The town is named after Boston, Massachusetts. The Town of Boston is an interior town of the county and one of the county's "Southtowns. , Philadelphia, Cleveland, Atlanta, Kansas Atlanta is a city in Cowley County, Kansas, United States. The population was 255 at the 2000 census. Geography Atlanta is located at (37.435287, -96.768672)GR1. City, Minneapolis, Dallas, and San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . Subsequently, the Board approved on April 19, 2001, similar requests by the boards of directors of the Federal Reserve Banks of Richmond and Chicago, effective immediately, and by the board of directors of the Federal Reserve Bank of St. Louis, effective April 20, 2001. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion