Analysts: Rate may not change in 2007
 

WASHINGTON – Feb. 1, 2007 – Analysts were not surprised that the Federal Reserve decided to hold the federal-funds rate steady at 5.25 percent at its meeting this week, but some were caught off guard by the central bank’s statements on economic growth and inflation.

A statement released after the meeting indicated that “inflation pressures seem likely to moderate over time,” cited “somewhat firmer economic growth,” and noted that the housing market appears to be stabilizing.

Analysts believe the central bank will leave the federal-funds rate unchanged for the rest of the year, but some predict that rate cuts are possible during the second half. Concerns about inflation have pushed up mortgage rates in recent weeks, with analysts noting that the 30-year fixed rate could soon hit 6.75 percent.

Source: Chicago Tribune (02/01/07) Crutsinger, Martin

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