WASHINGTON — The Federal Open Market Committee voted last week to maintain the federal funds target at 5-1/4% and said it expects the elevated core inflation to moderate in time.
The group noted the slowing housing market and its effect on economic growth over the past year. "Going forward, the economy seems likely to expand at a moderate pace," the FOMC said.
"Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."
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But, some inflation risks remain, according to the committee. "The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information," a statement from the committee said.
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