Release Date: May 3, 2005
For immediate release
The Federal Open Market Committee decided today to raise its target for the
federal funds rate by 25 basis points to 3 percent.
The Committee believes that, even after this action, the stance of monetary
policy remains accommodative and, coupled with robust underlying growth in
productivity, is providing ongoing support to economic activity. Recent data
suggest that the solid pace of spending growth has slowed somewhat, partly in
response to the earlier increases in energy prices. Labor market conditions,
however, apparently continue to improve gradually. Pressures on inflation have
picked up in recent months and pricing power is more evident.
The Committee perceives that, with appropriate monetary policy action, the
upside and downside risks to the attainment of both sustainable growth and price
stability should be kept roughly equal. With underlying inflation expected to be
contained, the Committee believes that policy accommodation can be removed at a
pace that is likely to be measured. Nonetheless, the Committee will respond to
changes in economic prospects as needed to fulfill its obligation to maintain
price stability.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman;
Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.;
Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark
W. Olson; Anthony M. Santomero; and Gary H. Stern.
In a related action, the Board of Governors unanimously approved a
25-basis-point increase in the discount rate to 4 percent. In taking this
action, the Board approved the requests submitted by the Boards of Directors of
the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland,
Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San
Francisco.
2005 Monetary policy
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Last update: May 3, 2005