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August 8th 2007

Fed Holds Rate Steady at 5.25

The U.S. Central Bank voted unanimously to hold interest rates steady on Tuesday, resisting pressure from Wall Street calling for an rate cut. The federal funds rate has now been at 5.25% for over a year. The Fed feared that a rate cut would only do more damage to the USD, which is already weak overseas. According to the Chicago Tribune:

About the only consolation for financial markets was the fact that the central bank at least mentioned these concerns in a statement after its meeting. That acknowledgment gave Wall Street faint hopes of an interest-rate cut later this year if credit conditions continue to deteriorate.

Tightening credit, combined with a continuing housing correction, have slammed stock prices over the past weeks. A high level of volatility has signaled to many that the bull market is over and that the credit crunch could be worse than believed

Read more: Central bank holds line on interest rates

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Posted by Adam Kritzer | in Central Banks, Politics & Policy | No Comments »

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