Fed rate remains unchanged

The Federal Open Market Committee today agreed to leave the federal funds rate unchanged at 5-1/4 percent, reaffirming its position that fighting inflation remains its number-one priority. The Committee, in its press release, commented:

“Economic growth was moderate during the first half of the year. Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters, supported by solid growth in employment and incomes and a robust global economy.”

This result was expected by most folks, despite the downturn in America’s credit markets, where financing—even for low-risk debtors—has ground to a halt in recent days. Predictably, after a strong start to today’s trading session on Wall Street, stocks slipped from their morning highs in what has become a familiar sight over the past week: the afternoon sell-off.