Bush's Economic Report
During the Bush administration, both monetary and fiscal policy have been expansionary, and the growth in real output in the past quarter of more than seven percent indicates that these policies were effective. The Federal Reserve reduced the Federal funds rate from 6.5 percent in 2001 to 1.25 percent in 2002. As described in the "Economic Report of the President, 2003," a reduction in interest rates is expected to stimulate demand by "encouraging consumption (particularly of durables), stimulating business investment (by lowering the cost of capital), promoting residential investment (as seen from the booming housing sector), and lowering the foreign exchange value of the dollar (which tends to raise exports and lower imports)."