Friday, January 05, 2007

Inflation, Housing Worry Fed

The Federal Reserve is anticipating a battle on two fronts: rising inflation and a slowing economy. But right now, the Fed is sitting on the sidelines.

The minutes from the Fed’s December Open Market Committee meeting show a central bank torn between its duty to quell inflation and its obligation to help the economy grow: "Several members judged . . . the downside risks to economic growth in the near term had increased a little and become a bit more broadly based than previously thought."

The minutes continued, "Nonetheless, all members agreed that the risk that inflation would fail to moderate as desired remained the predominant concern."
But instead of tackling the risks head on, the Fed held rates at 5.25 percent. The Fed did add language to the Fed statement indicating that a rate increase to combat inflation is possible in the future.

Proof that the Fed is between a rock and a hard place is one member’s request for the statement to say that rates could go up or they could go down. That’s reassuring!
The Fed next meets at the end of January. Whether they’ve picked either battle to fight will be revealed then.

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Vito Boscaino
Owner / Realtor / MBA
Help-U-Sell North High Realty
4485 North High Street
Columbus, Ohio 43214

Office: 614.447.3050

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