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Fed corrects policy statement
Central bank raises another quarter-point to 3 percent, retains 'measured' language.
May 3, 2005: 4:58 PM EDT
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NEW YORK (CNN/Money) - The Federal Reserve issued a corrected statement late Tuesday, saying it had mistakenly left out a line about inflation.

"Longer-term inflation expectations remain well contained," the Fed said in a corrected statement, which accompanied the quarter-point increase in the central bank's federal funds rate, to 3 percent.

The line, at the end of the second paragraph of the statement, was "dropped inadvertently", the Fed said on its Web site. Similar language had been in the central bank's statements from the four previous meetings.

Following is the corrected statement accompanying the central bank's rate hike decision:

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 3 percent.

The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity. Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices. Labor market conditions, however, apparently continue to improve gradually. Pressures on inflation have picked up in recent months and pricing power is more evident. Longer-term inflation expectations remain well contained.

The Committee perceives that, with appropriate monetary policy action, the upside and downside risks to the attainment of both sustainable growth and price stability should be kept roughly equal. With underlying inflation expected to be contained, the Committee believes that policy accommodation can be removed at a pace that is likely to be measured. Nonetheless, the Committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Richard W. Fisher; Edward M. Gramlich; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; Anthony M. Santomero; and Gary H. Stern.

In a related action, the Board of Governors unanimously approved a 25-basis-point increase in the discount rate to 4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

For more about today's rate rise and policy statement, click here.

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