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Economy in Brief

Federal Funds Rate Steady at 5.25%
by Tom Moeller October 25, 2006

The target interest rate for Federal funds was held steady at 5.25%, where it has been since late June, at today's meeting of the Federal Open Market Committee.

Voting against the decision for the third consecutive meeting was Richmond Federal Reserve Bank President Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target.

The discount rate also was held steady at 6.25%.

Today's decision was widely expected by analysts.

The Fed's rationale for leaving rates unchanged was that "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."

The need for continued vigilance was stressed by the Fed. "... 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

For the complete text of the Fed's latest press release please follow this link.

Inflation Persistence in an Era of Well-Anchored Inflation Expectations from the Federal Reserve Bank of San Francisco can be found here

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