Wednesday, June 25, 2008
Another Federal Reserve Open Market Committee group therapy session came to a merciful conclusion earlier today with no change to short-term interest rates for the first time since last fall when the current credit crisis began.
[Hey, wasn't that little three-month credit problem supposed to be over by now?]
With the Fed funds rate left at the freakishly low level of just two percent, Federal Reserve officials expressed renewed concerns about inflation but still expect it to moderate in the period ahead.
The last two policy statements are shown below:
Interestingly, given yesterday's report on home prices and today's report of even lower new home sales, the "deepening housing contraction" has been re-characterized as the "ongoing housing contraction" which, yes, is still expected to "weigh on economic growth" for a while.
On the subject of rising prices, this may go down as the longest continuous period of time for a central bank to wait for inflation to moderate - that's been the party line for the better part of two years now and it looks like another entry can now be added to this very long list of Fed expectations regarding inflation.