Federal Reserve policy-makers today kept the federal funds target rate at 5.25%. "Recent indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market," according to a statement by the Federal Open Market Committee, which set the rate. "Overall, the economy seems likely to expand at a moderate pace over coming quarters."
The committee also said readings on core inflation have improved modestly in recent months, and that inflation pressures seem likely to moderate over time. "However, the high level of resource utilization has the potential to sustain inflation pressures," the committee statement added.
"It paints a bit of a reassuring picture," said Robert von Halle, senior vice president and director of business development at Horizon Cash Management. "Instead of worrying about growth slowing, they're now talking about seeing a firmer growth trajectory. That sets the stage for a very extended period throughout 2007 of unchanged policy. We think they're comfortable at the current levels."