Fed Keeps Rate at 2%, Ending Most Aggressive Easing Since 1980s

[swag]

Source: Bloomberg

By Craig Torres

June 25 (Bloomberg) -- The Federal Reserve left its benchmark interest rate at 2 percent, ending the most aggressive series of rate cuts in two decades, as higher energy costs threaten to boost inflation.

``The Committee expects inflation to moderate later this year and next year,'' the Federal Open Market Committee said in a statement today in Washington. ``However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.''

Fed Chairman Ben S. Bernanke and his colleagues refreshed their forecasts at their two-day meeting and may have concluded the economy is likely to avoid a contraction. At the same time, crude oil prices have almost doubled in the past year and the cost of commodities from wheat to tin jumped to unprecedented levels.

``Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased,'' the Fed added. ``The Committee will continue to monitor economic and financial developments, and will act as needed to promote sustainable economic growth and price stability.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=abQ3cIKi7qEQ&refer=home

[DJ13]

1. Bad move

They seem more worried about the stock market than about the serious inflation thats crippling our economy.

The stock market is NOT in their mandate.

[Javaman]

2. my same feeling. I wish they would raise the damn thing. nt

[Psephos]

5. I think they're more worried about cratering the dollar further

which brings its own raft of trouble, including driving up the price of commodities, including oil and corn.

They don't have much farther to go on interest rates anyway. Take a look at how little effect it had when Japan took theirs to 0%. The problem at this point is not in the money supply.

All IMHO, of course.

[Kaleko]

3. Warren Buffett tells CNBC that inflation is "exploding"

http://www.cnbc.com/id/25369551

... and that the US has been in a recession for months.

[customerserviceguy]

4. It's got to be a tough choice either way

if the Fed drops interest rates, then the dollar loses more value, and the price of oil goes up to compensate for that. If they raise rates, then the adjustables take a big hit, and we deal with more foreclosures.

I'm sure as hell glad that I'm not Bernanke right now.

[DailyGrind51]

6. Having a strong dollar will not only help lower the cost of gasoline,

it will help seniors and others living on savings, and those traveling overseas. The double-digits we had under Carter, did not hurt everyone, especially those who were paying 9% on mortgages secured earlier, yet were getting 12.5% on their bank CDs.