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Economy in Brief

Fed Funds Rate Increased to 3.50%
by Tom Moeller August 9, 2005

The Federal Open Market Committee increased the target rate for federal funds an expected 25 basis points to 3.50%. The discount rate also was raised 25 basis points to 4.50%. This latest increase is the tenth since last June.

The decision was unanimous.

Today's press release from the Fed continued to contain a comment suggesting that rates could be raised again. "The Committee believes that, even after this action, the stance of monetary policy remains accommodative ..."

The statement added that "Aggregate spending, despite high energy prices, appears to have strengthened since late winter, and labor market conditions continue to improve gradually."

Constantly vigilant, the Committee succinctly stated that "... pressures on inflation have stayed elevated."

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

Trends in Federal Funds Rate Volatility from the Federal Reserve Bank of New York is available here.

Additional Slack in the Economy: The Poor Recovery in Labor Force Participation During This Business Cycle from the Federal Reserve Bank of Boston can be found here.

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