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Inflation not dire enough to sway Fed

Real estate roundup
Published on Aug 5, 2008

Fed stands pat on short-term rates The Federal Reserve is keeping its target for the interest rate banks charge each other for overnight loans at 2 percent, as expected, saying labor markets have softened and financial markets remain "under considerable stress." The Federal Market Committee in June ended a string of seven successive cuts to the federal funds rate, which brought the rate down from 5.25 percent in an attempt to stimulate borrowing and economic growth. Some critics say the Fed's actions have devalued the dollar and fueled inflation, which could put upward pressure on long-term interest rates including fixed-rate mortgages. In a statement, the committee acknowledged that inflation has been high, but expects it to moderate later this year and next. Nevertheless, the inflation outlook remains "highly uncertain," the committee said, and "the upside risks to inflation are also of significant concern." The Fed could eventually decid...

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