Analysis finds. The position of the Fed statement is neutral to the tough, Fed will not be limited to the Declaration, but still admit that inflation concern. From economic growth, the Fed had to observe the 2% of the federal funds rate levels can stimulate economic growth.
(http://finance.) United States Federal open market Committee (FOMC) to 10-1 vote results for the second consecutive time decided to maintain the federal funds target rate unchanged at 2%. Last September to April FOMC 3.25 percentage cumulative interest rate cuts, aimed at curbing the housing market and credit market crisis. Fed officials have also decided to keep interest rates discounted 2.25% unchanged.
Dallas Fed President Fisher branch's fifth consecutive voting against, he tends to rise. However, two consecutive sessions only he opposed. This indicates that the Fed officials in monetary policy generally cautious.
Elizabeth Duke sworn in as Fed members on Tuesday, the first time to participate in the Policy Committee meeting, she and most members voted in favour of the same cast. Washington, d.c., area in the vote of the members are almost always coherent with the Fed Chairman.
Fed says that despite the economic growth of descending risk persists, the risk of rising inflation as Policy Committee is very worried.
Fed's position is June 25, the Conference Declaration, at that time, the officials said that inflation is their most concerns, their concern for others even more than the weak economic growth. Fed in June, despite economic growth facing downward risks remain, but the risk seems to be less, while inflation and inflation expectations of uplink risk on the rise.
Although the United States in the second quarter annualised economic growth rate 1.9%, but Outlook worsened in the second half. United States Government announced on Friday, July non-farm employment for the seventh consecutive month decline, unemployment rises to 4-year high point 5.7%. Unemployment level has reached the end of the year for 2008 Fed rate expected interval 5.5%-5.7% high-end, this increase in speed that Fed officials by surprise.
Covers United States gross domestic product (GDP) of about two-thirds of expenditure are also shown weakness, especially in the automotive and other value higher commodity consumption is particularly weak. Fed said that the further weakening in the labour market, while financial markets remain under considerable pressure.
Although the FOMC June Conference published inflation indicators significantly higher — consumer price index (CPI) is the result of the 20th century since the early 1980s, the second largest monthly increase, while the Fed value the personal consumption expenditures (PCE) price index is also significantly higher — but actual inflation prospects had improved.
The FOMC June and August meeting, the price of crude oil fell by approximately 15 per barrel, while some of US dollar index shows inflation is expected to hold steady or even declined. In addition, the increases mean that employment market weak enough to restrain labor costs, avoid the 1970s and 1980s, the policy makers headache wage price spiral situation appears.
Although interest rate futures price display market expected the federal funds rate will increase by the end of the year, but are increasingly Fed observers think that monetary policy only next year may enter the tightening cycle. This year the remaining two interest rate meeting (in September and October meeting) will be at the climax stage of United States presidential election.
In addition, the Fed decided last week to the Investment Bank provides loans for the period from September to January 2009, this will also make the interest rate at the end of this year's efforts.
Federal open market Committee (FOMC) statement:
Economic activity in the second quarter, due in part to expansion in response to consumer spending and exports. However, the further weakening in the labour market, financial market pressures are heavy.
Credit conditions tighten marketable, flagging, and high energy prices that may make economic growth over the next few quarters under pressure. Over time, a significant relaxation of monetary policy, combined with increased market liquidity measures continued, will help bring economic moderate growth.
In the energy and other commodity prices rising slightly earlier, inflation has been stimulated by the high side, some indicators of inflation expectations have also been pushed up. The Committee expected later this year and next year, the inflation will be converted into a mild, but the inflation Outlook remains highly uncertain.
Although downside risks to growth remain, but inflation risks remain deeply concerned by the Commission. The Commission will continue to pay attention to the economic and financial development, will also be necessary to take action to promote sustained economic growth and price stability.
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