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 August 09, 2007

Federal Reserve Keeps Rates Steady and Acknowledges Risk
For the ninth straight meeting, the Federal Reserve held its benchmark rate steady at 5.25%. The reason for their decision is mainly due to the controlling of inflation. The Fed did acknowledge the accompanying risks of the unstable housing market.
The Fed summed up its views in this policy statement:

The Federal Reserve stated that the financial markets have seen volatile activity in recent weeks. Households and businesses have experienced tighter credit conditions. The housing market correction is ongoing.

The board believes that the economy seems likely to continue to grow at a moderate pace in future quarters, and be supported by solid employment an income growth within a robust global economy.

Following the pronouncement, 21 economists were polled by Reuters for their opinion of the decision. 13 of them believe the board's next move will be a rate cut because of the downside economic risks that they have identified.

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