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Fed Leaves Rates Unchanged, Says Inflation Outlook is Better

The Federal Reserve said the nation’s inflation outlook was improving and left short-term interest rates unchanged yesterday, but stopped short of saying that inflation had been vanquished.

At the conclusion of a two-day meeting, the central bank’s policymaking Federal Open Market Committee said it had left a benchmark interest rate unchanged at 5.25%. The Federal Funds Rate has been at that level for a year. Before that, U.S. borrowers had endured two years of steadily rising interest rates.

The Fed said inflation readings on so-called “core” inflation – which excludes volatile food and energy prices – had gotten “modestly” better in recent months. But the central bankers also said that “a sustained moderation in inflation pressures has yet to be convincingly demonstrated.”

However, in announcing the steady monetary policy, the Fed removed language present in previous statements that said inflationary pressures were “somewhat elevated.”

June 29th, 2007

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