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FRBSF University Symposium

Board of Governors

Governor Randall S. Kroszner

Chris ClarkHeidi Downs

Travis George Jim MignanoFinian Small

Current US Economic Conditions • Deceleration of GDP growth

– Consumer spending slowing down– Decrease in residential investment

•Largest decrease since 1991– Inflation is still under control


Current US Economic Conditions


Percentage Change in Real GDP and Related Measures

-20

-15

-10

-5

0

5

10

15

20

25

2004-Q1 2004-Q2 2004-Q3 2004-Q4 2005-Q1 2005-Q2 2005-Q3 2005-Q4 2006-Q1 2006-Q2 2006-Q3

GDPRes. Fixed InvestmentPersonal Consumption ExpendituresGross Private Domestic InvestmentGovernment Spending

Current US Economic Conditions

• Fed Funds Rate: 5.25%

• Low unemployment

• Personal income increased


Current International Conditions • Improving current account

– Shrinking trade deficits

• Worsening capital account– Shrinking capital and investment net

inflow surpluses


Summary of Decision

• Domestic conditions are stable

• International markets are moving toward equilibrium

• A rate increase would only serve to disrupt natural market corrections
