WASHINGTON (AP) — Federal Reserve policymakers were surprised by how quickly the nation's economy slowed toward the end of last year, minutes of their late January meeting show.
Members of the Federal Open Market Committee, which sets interest rate policy, had expected the economy to lose steam in the second half of 2000, given the Fed's string of interest rate increases. Those higher rates aimed to rein in growth and keep the then-speeding economy from overheating.
But "the speed and extent of the slowdown were much more pronounced" than policymakers had anticipated, minutes of the Jan. 30-31 meeting showed.
At that meeting, members were unanimous in their decision to cut interest rates by another half percentage point, following up on a half-point reduction on Jan. 3, which came after a rare, inter-meeting move.
On Tuesday, the Fed reduced interest rates for a third time this year, by another half point, lowering the funds rate to 5 percent.