Fed Boosts Rate by One-Quarter Point

[papau]

http://story.news.yahoo.com/news?tmpl=story&ncid=716&e=2&u=/ap/20040630/ap_on_bi_ge/fed_interest_rates

Fed Boosts Rate by One-Quarter Point


WASHINGTON - The Federal Reserve boosted a key short-term interest rate by a one-quarter percentage point Wednesday, its first rate increase in four years, in an attempt to keep the economy and inflation on an even keel.

http://story.news.yahoo.com/news?tmpl=story&ncid=578&e=1&u=/nm/20040630/bs_nm/economy_fed_dc

Fed Lifts U.S. Rates a Quarter Percentage Point

WASHINGTON (Reuters) - The Federal Reserve raised U.S. interest rates for the first time in four years on Wednesday, boosting them a quarter percentage point in the first of a likely series of increases to keep inflation at bay.<snip>


Wednesday's decision formally ends an easing cycle that began in 2001 and took the key rate to 1 percent, its lowest level since 1958. <snip>

In its post-meeting statement, the central bank repeated a pledge to follow a "measured" pace, which markets have taken to imply it will opt for a course of smaller, quarter-point rate increases rather than larger ones. However, it said it would respond to changing economic prospects as needed.

[tritsofme]

1. "Measured Pace" included in their statement too. nt

[papau]

2. True - added as edit - but how does a 2:30 PR get released at 2:20?

Seems the AP is allowed to break the rules?

[tritsofme]

4. Its a 2:15 release. nt

[papau]

5. Thanks - I was trusting the business media as to release time - silly

me!

:toast:

:-)

[underpants]

3. Well Fred Barnes of the Weekly Standard this is a great sign of Bush's

economic policy and how successful they have been wouldn't you say?

Yes Britt I don't think there is any doubt that this is a clear sign and endorsement if you will of how successful and visionary President Bush's tax cuts were and frankly are.

I forgot to re-enforce that he IS the President

It's okay Britt just don't let it happen again

Mort?

Whatever Fred said I agree with

Okay I was just checking....

[papau]

6. Fed Statement below

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 1-1/4 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. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid pace and labor market conditions have improved. Although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors.

The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters are roughly equal. With underlying inflation still expected to be relatively low, 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; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

In a related action, the Board of Governors approved a 25 basis point increase in the discount rate to 2-1/4 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.

[missile_bender]

7. I don't understand Greenspan

He's a free-market czar, protege of Ann Rand, etc. Where in the free market model does Federal Reserve manipulating interest rates fit? Rising rates hurts consumers and small business. It won't stop inflation of health care, drug prices, food, education. This is just another way to consolidate money into the hands of a few big businesses and banks.

[Dover]

8. I read an article a few weeks ago that said they had decided to

raise the rates faster than they had, at first, thought they would.

Is that still the case?

[tritsofme]

9. Well if you had told me in January that we would be raising rates

before the election I would have been quite surprised.

I thought the earliest possible date for a move be would have been August, but increased job growth and other inflationary pressures have forced the fed to act sooner.

But this increase has been priced into the equity and bond markets for a few months, and was probably one of the most telegraphed moves in modern central banking.

The fact that their statement included the term "measured pace" means we will probably see increases of 25 basis points at each meeting, at least until the end of the year.