Executive Summary
In the spring, policymakers perceived some signs of softness in spending, which they attributed in part to the earlier step-up in energy prices. Nonetheless, the federal funds rate was still relatively low, and robust underlying growth in productivity was providing ongoing support to economic activity. Accordingly, the Committee anticipated some strengthening of activity, and it reduced policy accommodation further in May by lifting the target federal funds rate another quarter percentage point, to 3 percent.
Subsequently, the devastation caused by Hurricane Katrina increased uncertainty about the vitality of the economic expansion in the near term. The destruction in the Gulf Coast region, the associated dislocation of economic activity--including considerable disruption of energy production--and the accompanying further boost to energy prices were expected to impose some restraint on spending, production, and employment in the near term.
Over the following......

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Title: Macroeconomic Forecast Paper
Approximate Word Count: 485
Approximate Pages: 2 (250 words per double-spaced page)

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