Fed Leaves Interest Rates Unchanged
or the fourth straight meeting, the Federal Reserve's Open Market Committee voted Wednesday not to change U.S. interest rates, saying that economic activity is increasing but the upward momentum from the swing in inventory investment and the growth in final demand is moderating.
The central bankers retained their assessment that the risks to the economy are balanced between weakness and inflation. This neutral stance suggests rate increases aren't imminent, analysts told Bloomberg.
The policy-setting FOMC cut interest rates 11 times in 2001 in an attempt to stimulate spending, which boosts the demand for the trucking services. If interest rates are increased, it does signal the economy is improving, but could increase monthly interest expenses for some trucking operations, especially if they carry large floating-rate debt on their equipment.
Looking ahead, the Fed said in its release it expects demand to pick up over coming quarters, but the degree of the strengthening remains uncertain.
The Fed's next meeting is scheduled for Aug. 13, and economists told the Associated Press it is very unlikely rates will be increased, especially in light of recent stock market losses.
By Transport Topics
Full Statement by the Federal Reserve
The Federal Open Market Committee decided today to keep its target for the federal funds rate unchanged at 1 3/4%.The information that has become available since the last meeting of the Committee confirms that economic activity is continuing to increase. However, both the upward impetus from the swing in inventory investment and the growth in final demand appear to have moderated. The Committee expects the rate of increase of final demand to pick up over coming quarters, supported in part by robust underlying growth in productivity, but the degree of the strengthening remains uncertain.
In these circumstances, although the stance of monetary policy is currently accommodative, the Committee believes that, for the foreseeable future, against the background of its long run goals of price stability and sustainable economic growth and of the information currently available, the risks are balanced with respect to the prospects for both goals.
Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; William J. McDonough, Vice Chairman; Susan S. Bies; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jerry L. Jordan; Robert D. McTeer, Jr.; Mark W. Olson; Anthony M. Santomero, and Gary H. Stern.
Voting against the action: none.
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