Industry News

Federal funds rate stays at 5.25%

Futures traders more confident that Fed will stay put

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The Federal Reserve voted to keep the federal funds rate at 5.25 percent Wednesday, raising expectations that the benchmark short-term interest rate will remain unchanged for the near future. In voting not to raise the federal funds rate, members of the Federal Open Market Committee said economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace, members said in a press release. Inflation pressures seem likely to moderate over time, members said, reflecting reduced impetus from energy prices, contained inflation expectations and the cumulative effects of monetary policy. The Committee said some inflation risks remain, and that the timing of any additional interest-rate increases will depend on the evolution of the outlook for both inflation and economic growth. Jeffrey M. Lacker, president of the Richmond Federal Reserve, argued for an increase of 25 basis points in t...