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Balance of Risks Statement
(redirected from Balance-of-Risks Statement)

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Balance of Risks Statement
A statement the Federal Open Market Committee issues after each meeting indicating members' thoughts on potential, future policy decisions. The risks to which the name refers are the risk of inflation (combated with higher interest rates) versus the risk of recession (combated with lower interest rates). The balance of risks statement gives analysts some insight into what the FOMC is thinking. The FOMC began issuing balance of risks statements in 2000.


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The balance-of-risks statement attempted to provide insight into the major policy concerns of FOMC members over the "foreseeable future.
When it was adopted, the language of the balance-of-risks statement was intended to be more general than the previous statements of policy bias, to avoid giving the impression that the statements directly signaled impending changes in the funds rate target.
The replacement balance-of-risks statement focuses on providing insight into the Committee's assessment of the outlook for future real growth and inflation, but fails short of providing a full fledged forecast of the economy.
 
 
 
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