Highlights
The Federal Reserve as expected raised their overnight bank lending rate 25 basis points to 4.25%. But more importantly policy makers also offered light at the end of the tunnel, dropping the word "accommodation" and adding that only "some further" policy firming is needed. The statement will mark an end to regular expectations of 25-basis-point hikes.

Policy makers did indicate new concern over capacity constraints, pointing to possible pressure from increases in "resource utilization." Capacity constraints would represent a key threat to price stability and may be seen as a new factor that will keep the Fed's vigilance high. But the statement repeated that core inflation is low and that longer-term expectations are contained.

Bonds firmed in immediate reaction to the data and hopes that interest rates are peaking, which is also a plus for stocks which also popped higher. The dollar eased back on the announcement, which points to narrower interest rate spreads in the international markets.

The following is the main part of the statement:

"Despite elevated energy prices and hurricane-related disruptions, the expansion in economic activity appears solid. Core inflation has stayed relatively low in recent months and longer-term inflation expectations remain contained. Nevertheless possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.

"The Committee judges that some further measured policy firming is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives."

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