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Economy in Brief

FOMC Raised Interest Rates Again
by Tom Moeller August 10, 2004

As expected, the Federal Reserve raised the target rate for federal funds by 25 basis points to 1.50%. The discount rate also was raised to 2.50%.

The decision was unanimous.

Perhaps suggesting that rates will be raised even further, today's press release from the Fed indicated that "The Committee believes that, even after this action, the stance of monetary policy remains accommodative and, coupled with robust underlying growth in productivity, is providing ongoing support to economic activity."

Noting recent weakness in the US expansion, the Fed suggested that "This softness likely owes importantly to the substantial rise in energy prices. The economy nevertheless appears poised to resume a stronger pace of expansion going forward."

For the complete text of the Fed's latest press release please click here.

"New Keynesian Models and Their Fit to the Data" from the Federal Reserve Bank of San Francisco can be found here.

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