Industry News

Fed keeps federal funds rate at 5.25%

Inflation worries still outweigh risk of recession
Published on May 9, 2007

There's still a risk that inflation won't stay in check, despite the ongoing downturn in the housing market, members of the Federal Reserve's Open Market Committee said Wednesday in keeping the short-term federal funds rate at 5.25 percent. While some Wall Street investors are hoping the Fed will cut the federal funds rate to stimulate borrowing and ward off a possible recession, "the economy seems likely to expand at a moderate pace over coming quarters," Open Market Committee members said in a statement. Core inflation remains "somewhat elevated," and while inflation pressures seem likely to moderate over time, "the high level of resource utilization has the potential to sustain those pressures," members said. "In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected," the committee said of the unanimous vote. "Future policy adjustments will depend on the evolution of the outlook for both inflat...

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