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May 16, 2000 FOMC
Announcement
The Federal Open Market Committee voted
today to raise its target for the federal funds rate by 50 basis points to
6-1/2 percent. In a related action, the Board of Governors approved a 50
basis point increase in the discount rate to 6 percent.
Increases in demand have remained in
excess of even the rapid pace of productivity-driven gains in potential
supply, exerting continued pressure on resources. The Committee is
concerned that this disparity in the growth of demand and potential supply
will continue, which could foster inflationary imbalances that would
undermine the economy's outstanding performance.
Against the background of its long-term
goals of price stability and sustainable economic growth and of the
information already available, the Committee believes the risks are
weighted mainly toward conditions that may generate heightened inflation
pressures 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, Cleveland, Richmond, and
San Francisco. The discount rate is the rate charged depository
institutions when they borrow short-term adjustment credit from their
district Federal Reserve Banks.
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Last modified: March 17, 2001
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