Fed Leaves Rates Unchanged

At the Feds regularly scheduled FOMC (Federal Open Market Committee) meeting on June 25, 2008, the Fed left it's fed funds target rate at 2%, as widely expected. The Fed's statement indicated more concern over rising inflation and less concern over economic growth. The following url will lead to the actual statement on the Board of Governors website:

http://www.federalreserve.gov/newsevents/press/monetary/20080625a.htm

The Markets reaction to the statement was subdued as most participants anticipated that the Fed would stand pat on rates. An hour after the release of the statement, equities were off their highs and the treasuries have strengthened, sending their yields lower.

Only one Fed governor, Richard W. Fisher, voted in favor of raising the target rate. I think Mr. Fishers vote in favor of raising rates is indicative of the direction the Fed will likely go in the near future. It was probably too soon to raise rates at this meeting, but as we go forward, the need to raise rates will only increase, and the Markets will likely expect it.