[Fredslist] Fed Raised 25 Basis Points to 3.75%

[Dichter, Dan [PVTC]]

The following is the full text of the statement released today by the
Fed:

The Federal Open Market Committee decided today to raise its target for
the federal funds rate by 25 basis points to 3 3/4 percent.  Output
appeared poised to continue growing at a good pace before the tragic
toll of Hurricane Katrina. The widespread devastation in the Gulf
region, the associated dislocation of economic activity, and the boost
to energy prices imply that spending, production, and employment will be
set back in the near term.  In addition to elevating premiums for some
energy products, a disruption to the production and refining
infrastructure may add to energy price volatility.

While these unfortunate developments have increased uncertainty about
near-term economic performance, it is the Committee's view that they do
not pose a more persistent threat. Rather, monetary policy
accommodation, coupled with robust underlying growth in productivity, is
providing ongoing support to economic activity. Higher energy and other
costs have the potential to add to inflation pressures. However, core
inflation has been relatively low in recent months and longer-term
inflation expectations remain 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.

As always, please don't hesitate to contact our office with any
questions or needs.

_______________________________________
Daniel G. Dichter
Second Vice President - Investments
Smith Barney | Citigroup Global Markets, Inc.
31 West 52nd Street, 23rd Floor
New York, NY 10019
p. (212) 603-6178
f.  (212) 307-3863
dan.dichter at smithbarney.com



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