Fed seen to hold rates steady as mortgage pain deepens
Wednesday, August 8, 2007
THE Federal Reserve is widely expected to keep US interest rates on hold at its meeting yesterday despite increasing concerns about America's troubled housing and mortgage markets, economists say.
Ten members of the Federal Open Market Committee (FOMC), including Fed chairman Ben Bernanke, will have more than usual to debate as they convene inside the central bank's Beaux-Arts style headquarters in Washington.
In the past week, US stock markets have oscillated wildly, fears about the multitrillion-dollar mortgage market have mounted, Wall Street bankers have fretted about a related credit crunch, and the government has reported slower job growth.
Such turmoil alone would be enough to give Fed policymakers a headache, but they are also having to keep a close watch on inflationary risks triggered by high crude oil prices. However, it is not all doom and gloom.
The world's largest economy has picked up speed, expanding at a 3.4 per cent rate in the second quarter compared with its 0.6 per cent crawl in the first three months of the year.
As such, most Fed-watchers believe the central bank will keep its short-term federal funds rate pegged at 5.25 per cent, where it has sat for 13 months.
"The FOMC is widely expected to leave rates unchanged at its meeting," said Societe Generale economist Stephen Gallagher.
AFP
Ten members of the Federal Open Market Committee (FOMC), including Fed chairman Ben Bernanke, will have more than usual to debate as they convene inside the central bank's Beaux-Arts style headquarters in Washington.
In the past week, US stock markets have oscillated wildly, fears about the multitrillion-dollar mortgage market have mounted, Wall Street bankers have fretted about a related credit crunch, and the government has reported slower job growth.
Such turmoil alone would be enough to give Fed policymakers a headache, but they are also having to keep a close watch on inflationary risks triggered by high crude oil prices. However, it is not all doom and gloom.
The world's largest economy has picked up speed, expanding at a 3.4 per cent rate in the second quarter compared with its 0.6 per cent crawl in the first three months of the year.
As such, most Fed-watchers believe the central bank will keep its short-term federal funds rate pegged at 5.25 per cent, where it has sat for 13 months.
"The FOMC is widely expected to leave rates unchanged at its meeting," said Societe Generale economist Stephen Gallagher.
AFP
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