WASHINGTON — Improving economic activity was not enough to budge the Federal Open Market Committee on interest rates as it held its target rate of zero to 25 basis at its meeting last week.
FOMC noted an increase in consumer spending and positive inventory adjustments but said the federal funds rate would likely stay at historic lows "for an extended period." Inflation is not expected to pick up any time soon and market conditions were "roughly unchanged" the Fed said. While interest rates will stay where they are, the Fed is reducing its agency debt purchases and said those buys will stop by the end of Q1 2010.
In a brief analysis, NAFCU Economist Katrin O'Connor said the committee is keeping rates low "until economic growth can be sustained without stimulus efforts" but to expect a sharp rise in rates once the economy gets back on solid footing, which could be sometime late next year.
