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Federal Funds Rate Update

September 26, 2016

By: John B. Etrheim

Federal Funds Rate Update - September 21, 2016

The Federal Open Market Committee (FOMC) left its targeted Federal Funds rate unchanged, and the monetary policy remained accommodative – meaning access to money easier and cheaper for businesses to borrow.


The committee did note that the case for an increase has strengthened with a solid labor market and strong consumer spending.


Nonetheless, the FOMC decided to wait for further evidence of continued economic expansion in a 7-3 vote, the largest dissenting number since the initial tightening last year.


Those three committee members preferred to see a raise in the target range to a ½ to ¾ percent rate.
The FOMC cited inflation still being below target, business investments still weak and that more evidence is required before considering a rate hike.


An interpretation of their statement could lead one to believe that that a rate hike in 2016 is still very much on the table – targeting a ¼ to ½ percent rate and possibly occurring in December at their next meeting.

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