The Federal Open Market
Committee decided today to leave its target for the federal funds rate
Strengthening productivity growth has
been fostering favorable trends in unit costs and prices, and much recent
information suggests that these trends have been sustained.
Nonetheless, the growth of demand has
continued to outpace that of supply, as evidenced by a decreasing pool of
available workers willing to take jobs. In these circumstances, the
Federal Open Market Committee will need to be especially alert in the
months ahead to the potential for costs to increase significantly in
excess of productivity in a manner that could contribute to inflation
pressures and undermine the impressive performance of the economy.
Against this background, the Committee
adopted a directive that was biased toward a possible firming of policy
going forward. Committee members emphasized that such a directive did not
signify a commitment to near-term action. The Committee will need to
evaluate additional information on the balance of aggregate supply and
demand and conditions in financial markets.
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Last modified: March 17, 2001
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