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FOMC Leaves Interest Rate Target At 1%

By John S. McClenahen To the surprise of virtually no one, Chairman Alan Greenspan and the 11 other voting members of the Federal Open Market Committee (FOMC) left the influential federal funds target rate at 1% during a two-day meeting that concluded Jan. 28. The target rate, the interest banks charge each other for overnight loans, has been at 1% since June 2003. In a statement the FOMC said, "The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation." The FOMC noted that since its December meeting U.S. economic output has been expanding "briskly" while "new hiring remains subdued" even as "other indicators suggest an improvement in the labor market."

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