The Federal Open Market Committee at its
meeting today decided to maintain the existing stance of monetary policy,
keeping its target for the federal funds rate at 6-1/2 percent.
The utilization of the pool of available
workers remains at an unusually high level, and the increase in energy
prices, though having limited effect on core measures of prices to date,
still harbors the possibility of raising inflation expectations. The
Committee, accordingly, continues to see a risk of heightened inflation
pressures. However, softening in business and household demand and
tightening conditions in financial markets over recent months suggest that
the economy could expand for a time at a pace below the
productivity-enhanced rate of growth of its potential to produce.
Nonetheless, to date the easing of
demand pressures has not been sufficient to warrant a change in the
Committee's judgment that against the background of its long-run goals of
price stability and sustainable economic growth and of the information
currently available, the risks continue to be weighted mainly toward
conditions that may generate heightened inflation pressures in the
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Last modified: March 11, 2001
Published By Tulips and Bears