A Penny Saved

The Federal Open Market Committee decided against raising the target rate for Federal Funds today.

Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, the Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.

Based on the above press release, I’d say they’re a little less skitish on the housing market and inflation as a whole.  Economist’s View has a really nice comparison with the this meeting and the last showing where changes were made to the release.

One interesting thing to note is that the vote was not unanimous.  Jeffery Lacker dissented on the grounds that he wanted to raise the rate by .25 basis points.  Greg Mankiw has an interesting bit on changing the current structure of the FMOC to a median vote.  Read his post for better details, but I think it’s a great idea.

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