Leave Well Enough Alone, Fed Decides

WASHINGTON-The Federal Open Market Committee decided to maintain the federal funds rate target at 1 to 1.25% due to disappointing economic indicators from April. Production and unemployment proved disappointing last month, even taking the war in Iraq into consideration, according to a statement from the FOMC. “However, the ebbing of geopolitical tensions has rolled back oil prices, bolstered consumer confidence, and strengthened debt and equity markets. These developments, along with the accommodative stance of monetary policy and ongoing growth in productivity, should foster an improving economic climate over time,” it concluded. The FOMC members admitted that no one could predict the timing and extent of the economic upswing but predicted that the “upside and downside risks to the attainment of sustainable growth are roughly equal” over the next few quarters. At the same time, the slim chance of a significant dip in inflation is higher than of a jump from its current low level. “The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward weakness over the foreseeable future,” the statement read.