FOMC Likely To Leave Funds Rate At 1%

ByJohn S. McClenahen Unless Chairman Alan Greenspan and the 11 other members of the Federal Open Market Committee (FOMC) see something in U.S. economic that others are missing, the influential federal funds rate will be same tomorrow as it is today: 1%. The federal funds rate is the interest banks charge each other on overnight loans. The FOMC is slated to meet in Washington, D.C., tomorrow, Aug. 12, with an announcement of its interest-rate decision expected shortly after 2:00 p.m. Eastern time. Although the pace of U.S. recovery from the 2001 recession seems to be accelerating, inflation still seems well under control. Indeed, last week several economists were suggesting that the FOMC remains more worried about deflation than inflation and, thus, would not start tightening the money supply at tomorrow's meeting.