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Release Date: June 25, 2003

For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds
rate by 25 basis points to 1 percent. In a related action, the Board of Governors approved a
25 basis point reduction in the discount rate to 2 percent.
The Committee continues to believe that an accommodative stance of monetary policy,
coupled with still robust underlying growth in productivity, is providing important ongoing
support to economic activity. Recent signs point to a firming in spending, markedly
improved financial conditions, and labor and product markets that are stabilizing. The
economy, nonetheless, has yet to exhibit sustainable growth. With inflationary expectations
subdued, the Committee judged that a slightly more expansive monetary policy would add
further support for an economy which it expects to improve over time.
The Committee perceives that the upside and downside risks to the attainment of sustainable
growth for the next few quarters are roughly equal. In contrast, the probability, though
minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation
from its already low level. On balance, the Committee believes that the latter concern is
likely to predominate for the foreseeable future.
Voting for the FOMC monetary policy action were Alan Greenspan, Chairman; Ben S.
Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M.
Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Jamie
B. Stewart, Jr.
Voting against the action was Robert T. Parry. President Parry preferred a 50 basis point
reduction in the target for the federal funds rate.
In taking the discount rate action, the Federal Reserve Board approved the requests
submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York,
St. Louis, Kansas City, and San Francisco.
2003 Monetary policy
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Last update: June 25, 2003