Fed Keeps Rate at 5.25%, Retains Focus on Inflation Risk

[swag]

Source: Bloomberg

By Craig Torres

June 28 (Bloomberg) -- The Federal Reserve kept the benchmark U.S. interest rate at 5.25 percent and stressed that inflation is the ``predominant'' risk facing the economy.

``Readings on core inflation have improved modestly in recent months,'' the Federal Open Market Committee said today after a two-day meeting in Washington. ``However, a sustained moderation in inflation pressures has yet to be convincingly demonstrated.''

Officials have resisted calls for rate increases and cuts in the past year, helping the economy weather a housing slump and giving inflation a chance to recede of its own accord. While price gains have slowed, the statement suggests policy makers still envisage risks to price stability.

``The committee's predominant policy concern remains the risk that inflation will fail to moderate as expected,'' the Fed said. Turning to growth prospects, the Fed said ``economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector.''



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=adMbFcXP7fJU&refer=home

[A HERETIC I AM]

1. And the Dow responded by jumping up about 40 points in 5 minutes

n/t

[havocmom]

2. Re that inflation rate: What do they base it on? What do they exclude?

Seems they adjusted criteria a few years ago and I wonder just how reality based the official inflation rate is anymore.

[Trillo]

4. If the calculations for CPI were the same as they were in President Carter's

years, Social Security payments would reportedly be 70% higher today.

It's somewhere in this PDF, which overall is quite on topic to your question:
http://www.weedenco.com/welling/Downloads/2006/0804welling022106.pdf

[havocmom]

5. Thank you, SimpleTrend. Bookmarking your gift of reference source

:thumbsup:

[roamer65]

6. Not very.

If one uses the old pre-1980 manner of calculating inflation, we are at 10.3% right now. When I look around me, 10.3% does seem to fit. Current calculations of M3 money supply growth are around 13.3 %, a level not seen since the beginning of the 1974-75 inflationary recession.

http://shadowstats.com

Good website put together by a Dartmouth educated and Fortune 500 experienced economist.

[raouldukelives]

3. It's been narrowed down

From what I understand it's based solely on the cost increases in cat toys.

[mediawatch]

8. lol

that was funny! thanks!:rofl:

[MilesColtrane]

7. Keep those plates spinning Bernanke.

Your masters want to wring every last cent out of the market before it comes crashing down into a steaming pile of debris.