Fed Leaves Rate Unchanged, Shrugs Off Inflation Worries

As widely expected, the Federal Reserve Open Market Committee decided this week to leave the federal funds rate in the 0% to 0.25% range. And don't expect that to change anytime soon. Its press release said:

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

The Committee also isn't too worried about inflation. It said:

Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.


The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

I think that's right, but I still worry that it might not have the political audacity to take the necessary action to keep inflation low once the economy really begins a full-fledged recovery.

Finally, I'm happy to report that Atlantic Business readers did a lot better predicting the Fed's rate decision than they did with the national unemployment number last week: