FEDERAL OPEN MARKET COMMITTEE DIRECTIVE.The Federal Open Market Committee Federal Open Market Committee (FOMC) The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System. at its meeting on August 22, 2000, decided to maintain the existing stance of monetary policy, keeping 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.Notes: This is what news reports are referring to when they talk about the Fed changing interest rates. In fact, the FOMC sets a target for this rate, but not the actual rate itself (because it is determined by the open market). at 61/2 percent. Recent data have indicated that the expansion of aggregate demand Aggregate Demand The total amount of goods and services demanded in the economy at a given overall price level and in a given time period. It is represented by the aggregate-demand curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally there is a negative relationship between aggregate demand and the price level. Also known as "total spending". is moderating toward a pace closer to the rate of growth of the economy's potential to produce. The data have also indicated that more rapid advances in productivity have been raising that potential growth rate as well as containing costs and holding down underlying price pressures. Nonetheless, the Committee remains concerned about the risk of a continuing gap between the growth of demand and potential supply at a time when the utilization of the pool of available workers remains at an unusually high level. Against the background of its long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. of price stability and sustainable economic growth and of the information currently available, the Committee believes the risks continue to be weighted mainly toward conditions that may generate heightened inflation pressures in the foreseeable future.
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