The Federal Reserve cut interest rates in September and October to manage the macroeconomic "tail risks" posed by the slowdown in housing and disruption of financial markets. But the downside risk to economic growth now appears to be roughly balanced by the upside risk to inflation, Federal Reserve Governor Randall Kroszner told attendees at a financial conference in New York today. Kroszner said his remarks were his own, and do not necessarily reflect those of his colleagues on the Federal Open Market Committee, which sets the targets for key short-term interest rates, including the federal funds rate and the discount rate. But if Kroszner's views are shared by other members of the committee, the Fed may leave interest rates where they are when it meets again Dec. 12. After ratcheting up the federal funds rate to 5.25 percent at 17 consecutive meetings between 2004 and 2006 to cool the pace of economic growth, the Fed's Open Market Committee on Sept. 18 slashed the rate...
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