When the FOMC assembled at Chairman Greenspan’s next-to-last meeting, it backed away from its commitment to a one-quarter-point firming. Although the statement in December 2005 reported another modest increase in the funds rate to 4–1/4 percent, no longer did it assert, as in November, that “policy accommodation can be removed at a pace that is likely to be measured.” Rather, the placement of the word “measured” was altered to no longer imply the certainty of a further imminent move. Indeed, “policy accommodation” wasn’t mentioned at all. Instead, it referenced the “further measured firming that is likely to be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance,” and mentioned that “the Committee will respond to changes in economic prospects as needed.”²

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© 2016 David E. Lindsey

Policies and ethics