The Fed: It's a Goldilocks Economy

With growth and inflation conditions "not too cold or hot," Bernanke & Co. can keep policy steady in the months to come

As expected, Federal Reserve policymakers held the Fed funds target at 5.25% for the fifth straight meeting on Jan. 31. With rate hikes out of play—the Fed's last quarter-point tightening came in June, 2006—financial markets instead zeroed in on the subtle tailoring of the Federal Open Market Committee statement, as policymakers tried to adapt their core views about inflation and the economic outlook to the recent rash of firmer indicators.

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