FOMC leaves Fed Funds Rate at 5.25%
29 June 2007
29.06.07
As widely expected, the FOMC left interest rates unchanged at 5.25% during yesterday’s meeting as risk to the economy remain finely balanced.
In the accompanying statement, Bernanke remained upbeat about the health of the economy stating “economic growth appears to have been moderate during the first half of the year, despite the ongoing adjustment in the housing sector. The economy seems likely to continue to expand at a moderate pace over coming quarters.”
With regards to inflationary pressures, the statement read “readings on core inflation have improved modestly in recent months, however, a sustained moderation in inflation pressures has yet to be convincingly demonstrated.” Whilst this is slightly less hawkish that previous statements, it is unlikely that the Fed will be able to cut rates anytime soon and thus we anticipate rates remaining unchanged in the months ahead.