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FOMC Meeting - Rates Stay Near Zero


The FOMC meeting finished today, and as expected the fed funds rate remains near zero (0 to 0.25%). The Fed continues to say that this isn't going to change anytime soon:
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The Fed also gave the same line as it did in June regarding inflation:
The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

On the plus side, the Fed was more positive on the economy than it has been in previous meetings. There are signs that "economic activity is leveling out." The Fed also said that it "anticipates that the full amount [of Treasury securities] will be purchased by the end of October." This buying up of Treasuries was another factor in holding down interest rates.

As the economy continues to improve, we should start to see higher deposit rates. However, the higher rates could take a while. As mentioned in this WSJ article:
Many economists, however, still don't expect the central bank to hike rates for at least a year due to expectations of a weak labor market and low inflation.

There are three more FOMC meetings secheduled for 2009: September 22-23, November 3-4 and December 15-16.

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