FOMC Statement — 2005-11-01

Release Date: November 1, 2005 
      
For immediate release
      The Federal Open Market Committee decided today to raise its target for 
        the federal funds rate by 25 basis points to 4 percent.
       Elevated energy prices and hurricane-related disruptions in economic 
        activity have temporarily depressed output and employment. However, monetary 
        policy accommodation, coupled with robust underlying growth in productivity, 
        is providing ongoing support to economic activity that will likely be 
        augmented by planned rebuilding in the hurricane-affected areas. The cumulative 
        rise in energy and other costs has the potential to add to inflation 
        pressures; however, core inflation has been relatively low in recent months 
        and longer-term inflation expectations remain contained.
       The Committee perceives that, with appropriate monetary policy action, 
        the upside and downside risks to the attainment of both sustainable growth 
        and price stability should be kept roughly equal. With underlying inflation 
        expected to be contained, 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; Susan S. Bies; Roger W. Ferguson, 
        Jr.; Richard W. Fisher; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; 
        Anthony M. Santomero; and Gary H. Stern.
       In a related action, the Board of Governors unanimously approved a 25-basis 
        point increase in the discount rate to 5 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.
      
      
        
        2005 Monetary policy 
      
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       Last update: November 1, 2005