At its January 31 meeting, the Federal Open Market Committee (FOMC) lowered the target federal funds rate 50 basis points (bp) to 5.5%. In a related action, the Board of Governors approved recommendations by most Reserve Banks’ boards of directors to lower their discount rates a total of 50 bp to 5%. Reasons cited for the rate cuts included erosion in consumer and business confidence as well as weakness in retail sales and business capital equipment spending. This was the second decrease in the target federal funds rate in a month, the first being a 50 bp rate cut on January 3.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-02, pp. 04, 02.01.2001.