At its August 21 meeting, the Federal Open Market Committee lowered the intended federal funds rate 25 basis points (bp) to 3 1/2%. Its press release cited softening business profitability and capital spending as contributing to risks “weighted mainly toward conditions that may generate economic weakness in the foreseeable future.” Separately, the Board of Governors approved Reserve Bank requests for a 25 bp reduction in their discount rates to 3%. The discount rate and federal funds rate have been cut a total of 300 bp each since the start of the year.
Suggested citation: "Monetary Policy," Federal Reserve Bank of Cleveland, Economic Trends, no. 01-09, pp. 04, 09.01.2001.