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Wednesday February 02, 03:42
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FOMC STATEMENT
(by John Glagow)
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"The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 2-1/2 percent.
"Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions continue to improve gradually. Inflation and longer-term inflation expectations remain well contained.
"The Committee perceives the upside and downside risks to the attainment of both sustainable growth and price stability for the next few quarters to be roughly equal. With underlying inflation expected to be relatively low, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured."
KANSAS CITY FED PRESIDENT THOMAS HOENIG, JAN. 25
"I think that we will see our GDP growth will once again (be) in the neighborhood of 3.5 to 4 percent, perhaps a little more modest than 2004, but still very healthy growth above our long-run potential growth rate."
"My own view is that inflation will not be a major issue ... through the year."
"Policy is very much data-dependent. When we talk about measured, that’s what we mean."
* ATLANTA FED PRESIDENT JACK GUYNN, JAN. 24
"We’ve already seen some adjustment over the last six months in the preference of people’s holdings of dollars versus other currencies ... So far that adjustment has been very smooth."
"I think they have some confidence that we will in fact continue the path we’ve been on to get (interest) rates back to a point where we do not get inflationary pressures. I think, in fact, we have been on a path that will keep us ahead of that kind of a pressure."
"Although I do not think a significant pickup in inflation is imminent, I continue to be struck by talk of price increases that my business contacts say they are planning as the economy expands."
* FED GOVERNOR SUSAN BIES, JAN. 21
"I think there’s quite a bit of slack (in the economy), just from the point of view that with the ability to source worldwide for goods and technology allowing virtual access for information sharing worldwide, we’ve got sort of an undefined capacity that we didn’t have in the past.
"I think the trend rate that we have seen in the pickup in inflation is going to moderate. With it moderating, I think the Fed can continue the path that we’ve been following."
"In general I’m not particularly concerned about excessive risk-taking. We’ve seen little pockets of things but we think overall the process has been well-managed, particularly the financial institutions which are regulated."
* MINNEAPOLIS FED PRESIDENT GARY STERN, JAN. 21
"It’s always possible and maybe likely that we haven’t gotten the impact precisely correct (about higher oil prices). (But) economic growth was respectable last year despite higher oil prices."
RICHMOND FED PRESIDENT JEFFREY LACKER, JAN 21
"It (weak dollar) doesn’t need to pass through to the overall underlying inflation rate and as a result I’m confident that our economy and our policy apparatus is resilient enough to respond to the evolution of the foreign exchange value of the dollar"
"In dollar terms, capital spending is on a solidly upward trend and, adjusted for price changes, spending has been even stronger given the continuing decline on a secular basis in equipment prices."
"Real short-term interest rates can’t stay where they are now."
"I don’t see any reason why one would expect more excessive risk-taking with lower real interest rates. I don’t see any sign of excessive risk-taking."
ST. LOUIS FED PRESIDENT WILLIAM POOLE, JAN. 20
"Recent data, then, suggest that inflation is well controlled. The FOMC has emphasized that it is prepared, if necessary, to move more aggressively to protect the relatively low rates of core inflation that now exist."
"It seems likely that labor market conditions will continue to improve and that monthly employment gains will probably exceed by a comfortable margin the roughly 125,000 per month necessary to keep the unemployment rate constant."
"It’s an open question, though, whether we will return to the days when monthly employment gains of 200,000 per month or more were the norm, as they were during the last two business cycle expansions."
* NEW YORK FED PRESIDENT TIMOTHY GEITHNER, JAN 19 "The U.S. expansion has proven quite resilient." "We enter the new year with what appears to be a pretty solid underlying pace of growth. Core inflation is moderate, and various measures of inflation expectations suggest confidence in the the outlook for price stability."
* FED GOVERNOR BEN BERNANKE, JAN 19
"Inflation is likely to remain under control."
"I don’t think it’s the job of monetary policy to address (investor behavior)."
"Ultimately as the economy changes, we will have to change our communication accordingly. But I have no idea when that will be."
"As the expansion matures and hiring picks up, productivity growth tends to slow again as the level of employee effort returns to normal and as the need to devote firm resources to hiring and training new workers detracts from current production."
"The U.S. economy has likely entered this latter stage, as productivity growth appears to be falling from its recent high levels to a rate that is likely below its longer-term trend."
* FED GOVERNOR SUSAN BIES, JAN 18
"I believe that with underlying inflation expected to moderate, the Federal Reserve can continue to remove its policy accommodation at a measured pace, consistent with its commitment to maintain price stability as a necessary condition for maximum sustainable economic growth."
"In my view, even with a rise in interest rates and some moderation in profit growth, the business sector should remain financially strong and continue to expand."
* PHILADELPHIA FED PRESIDENT ANTHONY SANTOMERO, JAN. 18
"Looking forward, I expect real GDP to expand at a 3.5 to 4 percent rate through 2005."
"If the economy evolves as I expect over the next year or so -- with continued output growth, steady increases in employment, and reasonably low inflation -- then I expect we will continue to move the federal funds rate toward neutrality at a measured pace."
"The declining value of the dollar, combined with reasonable growth in the economies of our trading partners, should help stabilize our net export position in 2005."
The dollar’s weakness "is not a crisis or a concern at this point, it’s a matter of working through the dynamics of the previous price movements."
* MINNEAPOLIS FED PRESIDENT GARY STERN, JAN. 18
"I personally don’t have the sense that there is excessive risk-taking in U.S. financial markets."
"Market participants, I think, are confident, and I hope they are correct, and I believe they are, that inflation is going to stay low in this country. It’s going to stay low, in part, in large part, because we in the Federal Reserve are committed to maintaining low inflation."
"I think the economy is fundamentally sound, fundamentally resilient. It doesn’t require policy-makers getting things precisely correct, indeed it has a great ability to absorb shocks and surprises, positive and negative, and continue to advance."
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