Here is the text of the Federal Reserve's Wednesday statement on interest rates:
The Federal Open Market Committee decided today to lower its target for the federal funds rate by 25 basis points [a quarter of a point] to 1%. In a related action, the Board of Governors approved a 25-basis-point reduction in the discount rate to 2%.
The committee continues to believe that an accommodative stance of monetary policy, coupled with still robust underlying growth in productivity, is providing important ongoing support to economic activity. Recent signs point to a firming in spending, markedly improved financial conditions, and labor and product markets that are stabilizing.
The economy, nonetheless, has yet to exhibit sustainable growth. With inflationary expectations subdued, the committee judged that a slightly more expansive monetary policy would add further support for an economy which it expects to improve over time.
The committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome substantial fall in inflation exceeds that of a pickup in inflation from its already low level. On balance, the committee believes that the latter concern is likely to predominate for the foreseeable future.
Voting for the FOMC monetary policy action were Alan Greenspan, Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus Jr.; Roger W. Ferguson Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Jamie B. Stewart Jr.
Voting against the action was Robert T. Parry. President Parry [head of the San Francisco Fed branch] preferred a 50-basis-point reduction in the target for the federal funds rate.