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Federal Reserve keeps hands off interest rates

The Federal Reserve is leaving interest rates unchanged for now.
The Fed’s policymaking Open Market Committee ended a two-day meeting in Washington this afternoon without making any announcement on rates.
The decision leaves the federal funds rate at 5.25 percent.

Federal Reserve keeps hands off interest rates

The Federal Reserve is leaving interest rates unchanged for now.
The Fed’s policymaking Open Market Committee ended a two-day meeting in Washington this afternoon without making any announcement on rates.
The decision leaves the federal funds rate at 5.25 percent. The funds rate, which commercial banks charge each other for overnight cash, acts as an anchor for other short-term interest rates.
The discount rate, which the Fed charges its member banks for loans, also was left unchanged at 5 percent.
Michael Quinlivan, vice president of the Capital Markets Group at M&T Bank, said the decision signals the Fed’s feeling on gross domestic product growth. The growth rate in the second quarter was 4 percent. The Fed historically has favored nothing higher than 2 percent to 2.5 percent.
“This says that as long as inflationary factors aren’t showing up, and as long as it’s not too far off the (2 percent range) long-term, the Fed is comfortable,” Quinlivan said.
The decision will help to hold down rates on mortgages and other consumer loans locally, he said. It should also help keep the economy moving.
“I think given the factors, it’s a sound decision,” Quinlivan said.
He said economists will second-guess the Fed if June payroll figures to be released Friday show more than 200,000 new jobs have been created.
If that happens, he said, the Fed most likely will increase interest rates in August.
“I think the Fed is smart to wait and see,” he said.

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