At a meeting on 18 and 19 January 2001 the Monetary Policy Committee reviewed current and likely future economic developments in order to evaluate the monetary policy stance. The main conclusions of the committee are summarised in this statement. Since the last meeting of the Monetary Policy Committee international oil prices have declined markedly. The downturn in economic activity in the United States appears to have intensified. The growth in real gross domestic product for the third quarter of 2000 has been revised downwards from the previous estimate of 2,7 per cent to 2,2 per cent.
Various indicators point to a material slowdown of growth in the fourth quarter.
These developments prompted the Federal Reserve Board to lower the US Federal Funds rate by 50 basis points to 6 per cent on 3 January 2001. Despite the slowdown, the United States labour market remains tight and record deficits continue to be reported on the current account of the balance of payments. 1.3 Economic growth in the euro area slowed down somewhat. The annualised rate of increase in the real gross domestic product of the euro area declined from 3,3 per cent in the second quarter of 2000 to 2,7 per cent in the third quarter. The euro area inflation continued to accelerate and the increase in the overall harmonised index of consumer prices reached 2,9 per cent in November 2000, the highest rate since 1994.