The Corner

Fed Announcement

From the Senate Joint Economic Committee:

Fed Keeps Overnight Interest Rate Target at 5¼ Percent

The Federal Reserve’s monetary policymaking committee announced today that it has decided to keep its target overnight interest rate (the “federal funds rate”) at 5¼ percent.

Highlights of today’s monetary policy statement:

·         The Fed noted slowing of economic growth over the course of the year, partly a reflection of cooling in housing markets, and thinks that the economy will expand at a moderate pace in the near future.

·         The Fed noted elevated inflation in core prices (inflation measures excluding volatile energy and food prices).  As in its last two policy statements, the Fed said today that inflation pressures seem likely to moderate over time.

·         Also as in its last two policy statements, the Fed said today that: “The extent and timing of any additional firming that may be needed…will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”

o       Policy firming refers to increases in the Fed’s target overnight interest rate to moderate economic growth and contain inflation pressures.

o       The signal is that future rate decisions by the Federal Open Market Committee (FOMC), the Fed’s monetary policymaking committee, will remain “data dependant.” 

·         The Fed’s next scheduled monetary policy meeting is December 12.

·         The Fed’s policy statement that was issued today can be viewed here

Jonah Goldberg — Jonah Goldberg holds the Asness Chair in Applied Liberty at the American Enterprise Institute and is a senior editor of National Review. His new book, The Suicide of The West, is on sale now.

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