Global| Aug 05 2008FOMC Left Funds Rate at 2.00% - The Balance of Factors
by:Tom Moeller
|in:Economy in Brief
Summary
As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The action was as widely expected. The discount rate also was left unchanged at 2.25%. The Fed's statement showed the distinct [...]
As expected, the Federal Open Market Committee left the Federal funds rate unchanged today at 2.00%. The action was as widely expected.
The discount rate also was left unchanged at 2.25%.
The Fed's statement showed the distinct balance of factors which led to the decision to leave rates unchanged.1) "Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress."2) "Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth."3) "Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The decision was unanimous except that Richard W. Fisher, President of the Federal Reserve Bank of Dallas, preferred an increase in the target for the federal funds rate at this meeting.
For the complete text of the Fed's latest press release please follow this link.
Profits and Balance Sheet Developments at U.S. Commercial Banks in 2007 from the latest Federal Reserve Bulletin is available here.
| Current | Last | July | 2007 | 2006 | 2005 | |
|---|---|---|---|---|---|---|
| Federal Funds Rate, % (Target) | 2.00 | 2.00 | 2.00 | 5.05 | 4.96 | 3.19 |
| Discount Rate, % | 2.25 | 2.25 | 2.25 | 5.86 | 5.96 | 4.19 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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