Fleet Management

Fed Won't Lower Interest Rates

August 07, 2007

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The Federal Reserve Board's Open Market Committee decided Tuesday to keep its target for the federal funds rate at 5-1/4 percent, citing lingering inflation concerns.

"Although the downside risks to growth have increased somewhat, the committee's predominant policy concern remains the risk that inflation will fail to moderate as expected," it said.
The committee acknowledged the volatile financial markets in recent weeks as well as tighter credit conditions and the ongoing housing concern. But it also noted that, "the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy."
According to recent government data, the U.S. economy grew about 3.4 percent in second quarter after a gain of only 0.6 percent in the first quarter. Price increases excluding food and energy costs have slowed for four straight months. Personal consumption expenditures rose 1.9 percent in June following a 2 percent increase in May.

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