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The Federal Open Market Committee decided today to raise its target for the Federal Funds rate by 25 basis points to 5.25 percent. This is the 17th consecutive increase since mid-2004. "The Fed's statement saying that '...economic growth is moderating' reversed the more conditional statements of the past," said Bob Walters, chief economist of Loans. "The Fed's acknowledgement that the 17 rate increases are having their desired effect, and new language that allows them the possibility of pausing their rate increases when they next meet in August, was cheered by the markets. Immediately following the announcement, long-term interest rates have fallen and the stock market is rising," he continued. "While the Fed is still concerned about energy prices and the high demand for other resources, they noted that their current view on inflation is that it is contained. While the Fed didn't assert that they are done with future rate increases, this was the most positive statement since the rate increases began in 2004," Walters concluded.
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