Fed again leaves rates at 5.25%

WASHINGTON – The Federal Open Market Committee, the policymaking arm of the Federal Reserve System, today decided to keep its target for the federal funds rate at 5.25 percent. The entire panel voted in favor of leaving the rate unchanged.
“Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing,” the FOMC noted. “Nevertheless, the economy seems likely to expand at a moderate pace.”
The panel cited as its top concern “the risk that inflation will fail to moderate as expected.”
Bonds lagged after the decision though the dollar gained ground, according to Bloomberg News.
“People are a little more impatient than the Fed is,” John Silvia, chief economist at Wachovia Corp. in Charlotte, N.C., told Bloomberg. “They are not reacting to every wiggle in the economic data. They are looking down the road.”
The FOMC’s decision came as no surprise to analysts, however. In a survey of 101 economists before this afternoon’s announcement, every one predicted the Fed today would leave the funds rate unchanged, Bloomberg said. Analysts still expect a Fed rate cut, the survey found, but say it will come in the fourth quarter.
The federal funds rate, used for overnight loans between banks, has been at 5.25 percent since June. The FOMC has voted to leave it unchanged at every meeting since then, beginning in August.
Additional information, including the full statement of the Federal Open Market Committee, is available at www.federalreserve.gov/FOMC/.