Fed keeps key interest rates steady despite board member’s disapproval

January 27, 2010 by · Leave a Comment
Filed under: Economic News 

Interesting they are still keeping interest rates low for an “extended period” even though we are in a recovery.  They must know something we don’t.  They called the recovery moderate for sometime and that tells me that the earnings will not keep up  with where the market is priced so we should see a correction.

LA Times – Washington D.C. – Reporting from Washington – Amid the political rancor over Federal Reserve Chairman Ben S. Bernanke’s bid for a second term, central bank officials encountered some dissension in their first policy-setting meeting of the year, even as they affirmed their pledge to keep interest rates at near zero for “an extended period.”

For the first time in a year, the Fed’s monetary policy committee’s statement, issued at the conclusion of its two-day meeting Wednesday, came with a dissenting vote. Thomas M. Hoenig, president of the Federal Reserve Bank in Kansas City, voted against the policy action, indicating that economic and financial conditions had improved enough that the statement to maintain the benchmark short-term rate for an extended period was unwarranted.

Some analysts interpret “extended period” as meaning at least six months, but nobody knows for sure. And Hoenig’s opposition, which had surfaced in a speech he gave last month, didn’t seem to change most economists’ forecasts that the Fed would probably begin to raise the fed funds rate late this year — at the earliest.

Nonetheless, the dissenting voice could presage an earlier-than-expected hike in interest rates in a preemptive move to stave off long-term inflation or inflation expectations.

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