Federal Reserve Leaves Interest Rates Alone

Kurt Brouwer June 28th, 2007

This is not surprising, but I still think it is a positive for stocks. The Associated Press reports that:

‘…The Federal Reserve left a key interest rate unchanged on Thursday, hoping that a yearlong economic slowdown will cause inflation to retreat further.

Fed Chairman Ben Bernanke and his colleagues voted unanimously to keep the federal funds rate, the interest that banks charge each other, at 5.25 percent, where it has been for the past year…’

‘…In a brief statement explaining its actions, the Fed continued to say that its greatest concern was that the risk of inflation will not moderate as expected.

However, it expressed some optimism about recent developments on inflation, saying “Reading on core inflation have improved modestly in recent months.”…’

Under Chairman Ben Bernanke, the Fed has done a very good job of restraining inflationary impulses without strangling economic growth. In my opinion, this is the right thing to do. Leave interest rates alone.

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