Meeting of the Federal Open Market Committee

1
Meeting of the Federal Open Market Committee

• Towson University
• November 18, 2005

2
Target Rate vs. Effective Funds Rate

• Last Meeting
• Raised Federal Funds Target Rate to
• 4.00
• Todays Effective Federal Funds Rate
• 4.00

Source Bloomberg
3
Economic Indicators
4
Components of GDP Growth 3Q 2005
Total Goods and Services 3.8
Source BEA
5
Consumer Price Index vs. Producer Price Index
S.A.January 1999-September 2005
CPI October 2005 0.2 Core 0.2 PPI October
2005 0.7
M/M percent change
Source BLS
6
Personal Consumption ExpendituresSeptember 2005
PCE September 2005 0.5
Y/Y percent change
Source BEA
7
University of Michigan Consumer Sentiment
SurveySeptember 2001-November 2005
Rose to 79.9 in November from 74.2 in October
Source Economy.com
8
Labor Sector
9
Payroll Employment S.A.January 2001-October 2005
Net Change October 2005 56,000
Source BLS
10
Unemployment Ratevs. Labor Force Participation
RateJanuary 2004-November 2005
Unemployment
Labor Force Participation
Current Unemployment 5.0 Current Labor Force
Participation Rate 66.1
Source BLS
11
Total Initial Claimants S.A. October
2001-September 2005
September 2005 257,454
Total Jobless Claims
Source BLS
12
Productivity3rd Quarter 2005
Percent Change
Source BLS
13
Finance Sector
14
Risk SpreadJanuary 2001-November 2005
Interest Rate
Source FRED
15
Term SpreadJanuary 2001-November 2005
Interest Rate
Source FRED
16
International Sector
17
Trade and Current Account Deficits
Trade Deficit YTD -469,500,000,000 Deficit as a
percentage of 3rd Quarter GDP 2005 3.7 Deficit
as a percentage of 3rd Quarter GDP 2004 5
Source Census Bureau, BEA
18
Foreign Exchange Rates
Source FRED
19
Energy Sector
20
Natural Gas vs. Effective Funds Rate
per MMBTU
Effective Funds Rate
Source FRED, EIA
21
Crude Oil vs. Effective Funds Rate
per barrel
Effective Funds Rate
Source FRED, EIA
22
Real Estate Sector
23
Existing Home Sales New Home Sales Month to
Month Percent Change June 2005-September 2005
M/M Percent Change
Source National Association of Realtors
24
Office Vacancy Rates for Select Metropolitan
Areas, Mid-Year 2005
Vacancy Rate
Source Delta Associates
25
30 Year Conventional Mortgage Rate, Weekly
November 10, 2005 6.36
Percent
Source FRED
26
Retail Sector
27
Retail Food Services Sale, Y/Y Percent Change
January 2001 through October 2005
Y/Y Percent Change
Source Dismal.com
28
Discussion
29
To be released in a statement shortly following
this meeting
The Committee believes that continuing to address
potential inflation at a pace that is likely to
be measured is the best course of action at
present. Therefore we will raise the target
rate twenty five basis points to 4.25 percent.
The Committee will respond to any inflationary
pressures with appropriate action to fulfill its
obligation to maintain price stability.
30
Thank You

• Mileva Cohen
• Brian Dinterman
• Thomas Dowling
• Jessica Fox
• Chris Goodman
• Andrew Young
• Dr. Matthew Chambers - Advisor