The Federal Reserve met today and left rates unchanged. With Lehman brothers going bankrupt this week and last week the Government taking control of Fannie Mae and Freddie Mac, we have seen chaos on Wall Street.
The Fed's continued "significant concern" with inflation was the biggest reason they left rates unchanged, even though the market had expected at least a .25% cut. Inflation numbers have turned extremely mild. Earlier in the day, the Labor Dept. announced that the consumer price index actually fell 0.1% in August, led by a steep decline in energy prices. After hitting $145 a barrel in early July, crude oil has plummeted on concerns that a global economic slowdown will decrease demand. On Sept. 16 oil fell $4.91, to $90.80 a barrel, on the New York Mercantile Exchange. Dropping Oil prices should help the economy a bit along with lower fixed rates.
I think it was a good decision by the Fed not to lower the short term fed funds rate. I think they are low enough and we don't need anymore inflation.
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