Fed Omits Key Sentence From Statement

No government agency is more careful about the statements it releases than the Federal Reserve (search), where a single word can move financial markets. But it made a goof on Tuesday, dropping a key sentence on inflation (search).

The Fed alerted reporters to the error one hour and 45 minutes after the initial one-page statement was released, saying the missing sentence "was dropped inadvertently."

Fed officials asked news agencies to report the dropped sentence before Wall Street stock trading ended at 4 p.m. EDT.

The initial Fed statement said, "Pressures on inflation have picked up in recent months and pricing power is more evident."

The dropped sentence, which should have followed immediately after that, put the concerns about inflation in a more positive light. It said, "Longer-term inflation expectations remain well contained."

The Dow Jones industrial average (search) was down 46 points five minutes before the close but surged into positive territory after the Fed error was reported. The Dow finished the day up 5.25 points at 10,256.95.

The Fed has only been issuing statements following interest-rate meetings since February 1994 and this is the first error made in any of those statements.