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2002, No. 10
Posted 2002-05-01

The Balance of Risks

In the past, whenever the FOMC had issued a statement indicating risk in the economy at one meeting, it had cut its funds rate target at (or before) the next scheduled meeting. Many analysts had begun to interpret this statement—that risks are weighted mainly toward conditions that may generate economic weakness—as almost a guarantee of a target cut at the next FOMC meeting.