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2005 U.S. Economic Events & Analysis
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FOMC Meeting Announcement
Definition
The Federal Open Market Committee consists of the seven Governors of the Federal Reserve Board and five Federal Reserve Bank presidents. The FOMC meets eight times a year in order to determine the near-term direction of monetary policy. Changes in monetary policy are now announced immediately after FOMC meetings.  Why Investors Care

Released on 11/1/05 For Oct 2005
Federal Funds Rate, Target Level
 Actual 4.00%  
 Consensus 4.0%  

Highlights
The Fed did what everyone expected, raising their overnight federal funds policy target by 25 basis points once again, now to 4.00% with no end of "measured" hikes in sight. The vote was unanimous this time around.

In their prior meeting on Sept. 20, Fed Governor Mark Olsen voted against a rate hike on concern over the unknown effects of Hurricane Katrina. Policy makers then warned of uncertainty and a "set back" from the storm. But their current assessment describes the storm's negative effects on output and employment as temporary. They further said that rebuilding will likely augment future growth.

The language on inflation was little changed. The statement cited high energy and other costs, which it warned have the potential to add to inflation, but repeated that core inflation and long-term inflation expectations remain contained.

There was little initial reaction in the financial markets. The statement will not awaken talk of 50-basis-point moves, and hawks may be a bit disappointed that concern over inflation still appears limited. But the message is clear: the Fed will continue to scale back what it sees as accommodative monetary policy.

Market Consensus Before Announcement
There does not appear to be any disagreement over the course of monetary policy these days - market players are expecting that the FOMC will indeed vote to raise the federal funds rate target by 25 basis points to 4 percent at the November 1 meeting. After seeing the minutes of the September meeting, market players will be looking for changes in the post-meeting statement.

Federal funds rate target Consensus Forecast for Nov 1 05: 4 percent (+0.25 percent)
Range: None
Trends
[Chart] The Fed closely monitors the core PCE deflator to indicate whether or not policy is approximately correct, overly accommodative, or too restrictive. The PCE deflator is prefered to the CPI because it is more closely aligned to the cost of living than the CPI (which measures a fixed basket of goods & services.)

This chart covers monthly data and the fed funds target rate reflects the monthly average. As such, it will not correspond to the most recent fed funds rate target announced by the Fed.
Data Source: Haver Analytics

2005 Release Schedule
Released On: 2/2 3/22 5/3 6/30 8/9 9/20 11/1 12/13
Released For: Jan Feb Apr May Jul Aug Oct Nov


 
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