*EPF209 05/04/2004
Text: U.S. Central Bank Keeps Interest Rates Steady
(Federal Reserve group says future hikes would likely be "measured") (380)

The policy-setting group of the U.S. central bank has again voted unanimously to hold its key interest rate at the current level as U.S. productivity and jobs continue to grow.

In a May 4 statement the Federal Open Market Committee (FOMC) of the Federal Reserve Bank said it decided to keep the federal funds rate -- the rate banks charge one another for overnight loans -- at 1 percent.

The committee, which has maintained the rate at 1 percent since June 2003, indicated that any changes to its accommodative monetary policy would likely be "measured" because inflation is still low.

"Output is continuing to expand at a solid rate and hiring appears to have picked up," the FOMC said. "At this juncture, with inflation low and resource use slack, the committee believes that policy accommodation can be removed at a pace that is likely to be measured."

Following is the text of the FOMC statement:

(begin text)

Federal Reserve Board
March 16, 2004

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period indicates that output is continuing to expand at a solid rate and hiring appears to have picked up. Although incoming inflation data have moved somewhat higher, long-term inflation expectations appear to have remained well contained.

The Committee perceives the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. Similarly, the risks to the goal of price stability have moved into balance. At this juncture, with inflation low and resource use slack, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured.

Voting for the FOMC monetary policy actions were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Thomas M. Hoenig; Donald L. Kohn; Cathy E. Minehan; Mark W. Olson; Sandra Pianalto; and William Poole.

(end text)

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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