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Economy in Brief

FOMC Holds Interest Rates Unchanged; Economic Outlook Deteriorates Notably
by Tom Moeller  August 9, 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 indicated that the economy may warrant an exceptionally low Fed funds rate at least "through mid-2013."

The Fed indicated "... that economic growth so far this year has been considerably slower than the Committee had expected ...The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.  Moreover, downside risks to the economic outlook have increased."

Regarding price inflation, the Fed indicated "Inflation picked up earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the supply chain disruptions.  More recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks.  Longer-term inflation expectations have remained stable."

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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