Fed Funds Rate Left Unchanged
June 25, 2008
Today the Federal Reserve has decided to leave the Fed Funds rate unchanged at 2.00%. While this move was highly anticipated, there was one dissenter who voted for a rate hike against market expectations. The Fed highlighted in their statement that while the financial markets continue to “remain under considerable stress,” they now feel that downside risks to growth “appear diminished somewhat”. In regards to inflation, the Fed states that “upside risks to inflation and inflation expectations have increased” citing a continued rise in energy and commodity prices. While they do expect inflation to moderate later this year and next year, the Fed still maintains a data dependency stance and “will act as needed to promote sustainable economic growth and price stability.” In large the market was neutral however the U.S. dollar declined nearly 0.8 percent against a basket of currencies.