The Fed stood pat on rates today, keeping the Fed Funds Rate at 2%, despite widespread turmoil on Wall Street. Weak growth is fighting inflation to a standstill within the Fed. Neither is able to get the upper, or lower hand and as a result, the Fed is doing the most prudent thing, and keeping rates steady.
While many thought the Fed needed to cut rates to save the stock market, most major stock indexes are on the positive side, with the Dow up 61.39 points as of 3:30 pm EST.
Savings and money market rates and cd rates should remain relatively stable or even trend higher as banks compete more aggressively for increasingly valuable consumer deposits.
The full text of the Fed statement is below:
Sept 16, 2008 For immediate releaseThe Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent.
Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending. Tight credit conditions, the ongoing housing contraction, and some slowing in export growth 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.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Ms. Cumming voted as the alternate for Timothy F. Geithner.
Related Articles:
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Weak Retail Sales Could Convince Fed to Cut Rates by PhilR - Sep 15, 2007
Heads in the Sand -- Inflation sure ain't "moderate" by walt - Jun 29, 2007
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Parsing the Fed - June 28, 2007 by Mike Poli - Jul 02, 2007
Bernanke: Housing Correction May Persist; Inflation Still a Concern by Sam Cass - Jul 18, 2007
Wall Street Down but Not Out by Sam Cass - Aug 10, 2007
Fed Funds Futures Point to Significant Probability of Rate Cut - May Want to Lock in CD Rates by Sol Nasisi - Sep 16, 2008
Fed Cuts Rates - Savings and CD Rates Sure to Follow by Sol Nasisi - Oct 08, 2008.
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