Fed Funds Rate Remains Unchanged

By John S. McClenahen Unless there's a dramatic and totally unexpected change in the U.S. economy during the next seven weeks, Chairman Alan Greenspan and his colleagues on the Federal Open Market Committee (FOMC) are likely to leave U.S. short-term interest rates unchanged at least until Aug. 13, their next scheduled meeting. Indeed, many economists don't see the Fed policymakers making a move before their Sept. 24 session. The target for the influential federal funds rate remains at 1.75%. At the end of this week's two-day meeting, the FOMC noted that U.S. economic activity continues to increase. However, said the panel, "both the upward impetus from the swing in inventory investment and the growth in final demand appear to have moderated." What's more, the FOMC said it was "uncertain" about the strength of an expected increase in final demand during the next few calendar quarters. The FOMC maintained its neutral stance between stimulating GDP growth and containing inflation, another indication that no change in the federal funds target rate is likely before August.

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