Fed stands at 5.25%

Posted on October 25, 2006 by grim

From the Fed:

FOMC Policy Statement

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.

Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.

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15 Responses to Fed stands at 5.25%

  1. James Bednar says:
    October 25, 2006 at 4:13 pm

    Truth,

    Email me at nnjbubble@gmail.com

    Thanks,
    jb

  2. ithink_ithink says:
    October 25, 2006 at 4:22 pm

    I’m thinking a Fed catch-up in 2007. .25 rise because holiday sales will do well, elections are over & it’ll look like unsold home inventory dropped again. Followed by .5 catch up… right when all the inventory comes back out after hibernating (which is why inventory of unsold homes fell a 2nd straight month). Remember in August to bring your cheesy smile to compliment the open house wines. I think the rate will be just under 7 by end of ’07.

  3. RentinginNJ says:
    October 25, 2006 at 5:05 pm

    I think the rate will be just under 7 by end of ‘07.

    I think we will be in recession territory before the end of 2007. It will take a while for consumer spending to catch up with the fact that housing prices are falling. It’s the same with any bursting bubble; the opinion makers will argue that it can be contained to housing without spilling over into the broader economy, but it always does.

    I think rates will probably remain unchanged, but if there is going to be a change, I’m betting in a rate cut before 07 is out.

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