Tuesday, August 5, 2008

Fed Leaves Rates Unchanged

For a second straight meeting the FOMC has left interest rates unchanged. The Fed will maintain the Fed Funds rate at 2% and the Discount rate at 2.25%.

The statement accompanying the announcement continued to show the Fed's confusion on whether to fight the financial crisis or inflation:

Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

Richard Fisher continues to be the sole inflation hawk on the Board.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Fisher, who preferred an increase in the target for the federal funds rate at this meeting.

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