Vital Signs: Big Reactions as the Fed Stays Put
The Federal Reserve remains focused on inflation, for now. In its Aug. 7 monetary policy statement, Chairman Ben Bernanke & Co. stated that inflation is still their top priority. However, the central bank acknowledged that credit conditions have tightened some and that the downside risks to economic growth have risen. The bottom line: the Fed is in no position to hike interest rates anytime soon, and more evidence of economic weakness would raise the chances for a rate cut. For now, the Fed appears to be on hold for an extended period (see BusinessWeek.com, 8/8/07, "The Bernanke Agenda: Just Say No").
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