Fed rate is steady for the 7th time


first_imgAnalysts viewed the minor changes in the Fed’s announcement as a signal that the central bank is not likely to change rates any time soon. “This statement signals no change for awhile,” said David Jones, head of DMJ Advisors, a private forecasting firm. Jones said he still believes the Fed’s next move will be a rate cut, but perhaps only a one quarter-point reduction late in the year after inflation has eased further in response to a weaker job market. The Fed’s last rate change occurred nearly a year ago – on June 29, 2006 – when the funds rate was increased for a 17th straight time. That capped a two-year period in which the central bank pushed the funds rate up from a 46-year low of 1 percent in an effort to slow the economy enough to restrain rising inflation pressures without pushing the country into a recession. The latest decision, which was announced after the Fed’s regular closed-door discussions, meant that the prime rate, the benchmark for millions of consumer and business loans, will remain unchanged at 8.25 percent. So far, the Fed’s plan seems to be working to slow economic growth and lower inflation pressures. But the steep slide in the once-booming housing sector has raised concerns among some economists that the slowdown could worsen into a more severe downturn. The Fed made only small changes in its brief statement commenting on current economic conditions. It stated that “economic growth slowed in the first part of this year” rather than saying that economic conditions were mixed, the way it had described the economy at its March meeting. But it continued to signal that its major concern was inflation, restating previous wording that the Fed’s “predominant policy concern remains the risk that inflation will fail to moderate as expected.” Economic growth, as measured by the gross domestic product, slowed in the January-March quarter to an annual rate of 1.3 percent, the weakest performance in four years, while the jobless rate inched up to 4.5 percent in April as businesses created just 88,000 new jobs. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! WASHINGTON – The Federal Reserve left a key interest rate unchanged on Wednesday as the economy signaled that it was on track for a soft landing in which growth slows enough to restrain inflation. Fed Chairman Ben Bernanke and his colleagues voted to keep the federal funds rate, the interest that banks charge each other, at 5.25 percent. It marked the seventh straight meeting at which the Fed has kept rates steady. The decision had been widely expected, but some Wall Street investors were still disappointed that the Fed did not modify its worries about inflation given recent data showing price pressures have eased a bit. The Dow Jones industrial average, which had spiked right before the announcement, at first dropped on the announcement but then made up the lost ground. It closed up 53.80 at a record 13,362.87. It is the index’s 21st record close this year. last_img read more