Forex - US Fed holds interest rate at 2.00%. | CountingPips Forex & Currency Trading Blog

June 25, 2008 - Forex Economic News

US Fed holds interest rate at 2.00%.

The U.S. Federal Open Market Committee left its benchmark interest rate unchanged today at 2.00 percent as expected. The FOMC voting was 9-1 in favor of no change in rate with Richard W. Fisher being the lone dissenting vote as Fisher was in favor of a rate increase. The FOMC has reduced the interest rate seven times since September 2007 but with surging energy prices and corresponding inflationary pressures many believe the next move for the Fed will be a rate increase.

The statement accompanying the rate decision took a more hawkish tone on inflation than on economic growth this month in comparison to months prior as the statement said, "Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased" and that "in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high."

The dollar dropped against many of its rival currencies after the rate announcement. The euro, in particular, spiked right after the announcement from trading below 1.5590 dollars per euro to above 1.5670. The next interest rate meeting for the FOMC is scheduled for August 5th.

Tags: fomc, fed us, interest rate, rates

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