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Monetary policy report to the Congress


  • anonymous


The economic expansion in the United States became increasingly well established in the first half of 2004, but the pace of inflation picked up from its very low rate in 2003. At the time of the February Monetary Policy Report to the Congress, considerable evidence suggested that the U.S. economy had moved into a period of more-vigorous expansion. Nonetheless, some businesses remained cautious about hiring and investment. In the event, businesses stepped up their hiring in the spring, and capital spending seems to have continued apace.> Over the first half of this year, energy prices soared, and inflation in core consumer prices increased. To some extent, the upturn in core inflation reflected the indirect effects of higher energy prices. In addition, strengthening aggregate demand worldwide induced a surge in the prices of many primary commodities and industrial materials, and the decline in the dollar in 2003 put upward pressure on import prices. In this environment, firms were better able to pass on the higher costs of imports, raise the prices of domestically produced items that compete with imports, and in many cases boost their profit margins.> Monetary policy was very accommodative at the start of 2004 as the Federal Open Market Committee (FOMC) sought to provide continuing support to the economic expansion. Following some upbeat labor market reports, solid growth in output, and a pickup in core consumer price inflation, the FOMC announced at its May meeting that it believed that the monetary policy accommodation then in place could be "removed at a pace that is likely to be measured." At its June meeting, the FOMC decided to begin moving the federal funds rate back toward a more neutral setting.> Although some of the recent data have been on the soft side, the available information on the outlook for the U.S. economy is, on balance, positive. The prospects also seem favorable for inflation to remain contained in the period ahead.

Suggested Citation

  • anonymous, 2004. "Monetary policy report to the Congress," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Sum, pages 266-288.
  • Handle: RePEc:fip:fedgrb:y:2004:i:sum:p:266-288:n:v.90no.3

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    Cited by:

    1. Milani, Fabio, 2007. "Expectations, learning and macroeconomic persistence," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 2065-2082, October.
    2. Abreu, Denise A. & Riberas, Zulma T., 2008. "General Overview of the NASS Objective Yield and Objective Measurement Programs," NASS Research Reports 235073, United States Department of Agriculture, National Agricultural Statistics Service.
    3. Branch, William A., 2007. "Sticky information and model uncertainty in survey data on inflation expectations," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 245-276, January.
    4. Heiman, M.K., 2006. "Expectations for renewable energy under market restructuring: the U.S. experience," Energy, Elsevier, vol. 31(6), pages 1052-1066.
    5. Elías Albagli I., 2004. "¿Cuánto se Alejan de su Objetivo los Países que Siguen Metas de Inflación?," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(2), pages 63-70, August.
    6. repec:eee:rensus:v:76:y:2017:i:c:p:1080-1107 is not listed on IDEAS


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