Tuesday, March 28, 2006

Bernanke Fed Continues Rate Hikes

From Bloomberg:

Fed Raises Rate, Holds Out Prospect of More Increases

The Federal Reserve, beginning a new era under Chairman Ben S. Bernanke, raised the main U.S. interest rate to 4.75 percent and held out the prospect of further increases.

The quarter-point move is the 15th in a row, the longest stretch of increases in more than 25 years. Fed policy makers kept their assessment that energy prices and labor costs pose a risk to inflation.


``Some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance,'' the rate-setting Federal Open Market Committee said in its statement after meeting today in Washington. ``The run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation.''

The FOMC Statement can be found here:

FOMC March 28th Statement

The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-3/4 percent.

The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace. As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check, and inflation expectations remain contained. Still, possible increases in resource utilization, in combination with the elevated prices of energy and other commodities, have the potential to add to inflation pressures.

The Committee judges that some further policy firming may be needed to keep the risks to the attainment of both sustainable economic growth and price stability roughly in balance. In any event, the Committee will respond to changes in economic prospects as needed to foster these objectives.

The vote was unanimous.

Caveat Emptor!
Grim

6 Comments:

Anonymous Anonymous said...

Good for my bloated savings account, bad for my forthcoming bloated mortgage?

3/28/2006 03:35:00 PM  
Blogger grim said...

Hang tight folks.. The next salvo is going to come from the Realtors.

"Better buy now before rates return to their historical levels and owning a home will become even more unaffordable."

Where o' where will the Fed stop..

grim

3/28/2006 03:43:00 PM  
Anonymous Anonymous said...

"IT'S A GREAT TIME TO BUY"

Quote? Any guesses?

NOT!!!!!

Bagholders unite and boycott!

3/28/2006 03:43:00 PM  
Anonymous Anonymous said...

Yeah, I got an email from a broker today telling em the inventory increase was due to higher oil prices and interest rates, but buyers will be adjusting soon eating up the excess inventory. Telling me I should buy now otherwise I risk pricing myself out of the market next year (which I am already priced out of anyway).

Don't people realize Fed Fund rate has little effect on mortgage rates anyway and it is the bond market?

Just blasted that broker with that one too.

3/28/2006 10:19:00 PM  
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4/13/2006 07:32:00 PM  
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