17 September 2001, 16:36 FOMC text of statement
WASHINGTON (AFX) - The following is the full text of the Federal
Open Market Committee statement:
The Federal Open Market Committee decided today to lower its target
for the federal funds rate by 50 basis points to 3 percent. In a
related action, the Board of Governors approved a 50 basis point
reduction in the discount rate to 2-1/2 percent. The Federal Reserve
will continue to supply unusually large volumes of liquidity to the
financial markets, as needed, until more normal market functioning is
restored. As a consequence, the FOMC recognizes that the actual federal
funds rate may be below its target on occasion in these unusual
circumstances.
Even before the tragic events of last week, employment, production, and
business spending remained weak, and last week's events have the
potential to damp spending further. Nonetheless, the long-term
prospects for productivity growth and the economy remain favorable and
should become evident once the unusual forces restraining demand abate.
For the foreseeable future, the Committee continues to believe that
against the background of its long-run goals of price stability and
sustainable economic growth and of the information currently available,
the risks are weighted mainly toward conditions that may generate
economic weakness.
In taking the discount rate action, the Federal Reserve Board approved
requests submitted by the Boards of Directors of the Federal Reserve
Banks of Richmond, Chicago, Minneapolis, Dallas, and San Francisco.
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