|Interest Rates Nudge Upward|
Inflation, Interest Rates, and Economic Growth
For the eighth consecutive meeting, the Federal Reserve has raised the federal funds rate, leaving little doubt that more increases will follow. While the Fed did recognize that sharp oil price increases had affected the economy, its goal of ensuring lower inflation took precedence. "Recent data suggest that the solid pace of spending growth has slowed somewhat, partly in response to the earlier increases in energy prices," Fed officials said. They noted, however, that employment continues to increase and that employment trends reduce pressure to stimulate consumer spending by offering lower borrowing costs.
|Source||Edmund Andrews and Jonathan Fuerbringer, "Fed Raises Rates but Bobbles Delivery," The New York Times Online. May 4, 2005.|
Return to the Monetary Policy
©1998-2005 South-Western. All Rights Reserved webmaster | DISCLAIMER