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Economy in Brief

FOMC Holds Interest Rates Unchanged Citing Low Price Pressures
by Tom Moeller  January 26, 2011

As expected, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent." The Fed funds rate has remained unchanged since late-2008 at its lowest level ever. The discount rate also was left unchanged at 0.75%. The Fed's primary reasons for leaving rates unchanged focused on inflation and the absence of upward pressure on either price trends or inflationary expectations.

Regarding economic growth, the recovery was seen as continuing with household spending picking up late last year, but still "constrained by high unemployment, modest income growth, lower housing wealth and tight credit." While a pickup in economic growth has raised commodity prices, the Fed focused on the downtrend in underlying pricing pressures.To promote further economic improvement, the Fed will continue to expand its holdings of Treasury securities. Financial market liquidity is the goal. The accompanying monetary base chart indicates the huge injection of liquidity around the stock market crash.

A complete text of the Fed's latest press release can be found here.

The Haver databases USECON, WEEKLY and DAILY contain the figures from the Federal Reserve Board.

  Current Last 2010 2009 2008
Federal Funds Rate, % (Target) 0.00 - 0.25 0.00 - 0.25 0.17 0.16 1.93
Discount Rate, % 0.75 0.75 0.72 0.50 2.39
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