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Fed Leaves Rate "As is"

For the first time in two years, the Federal Reserve
left its benchmark interest rates untouched at its policy-setting meeting today.

The decision was not unanimous; one member of the Fed’s policy committee voted for raising rates.

The New York Times reports:

Few economists would dispute that the economy is decelerating; the question is how much. In the first three months of the year, gross domestic product grew at a rapid 5.6 percent clip, but in the second quarter, the reading was 2.5 percent.

At the same time, the job market is showing signs of weakness. Last week, Labor Department figures showed that more Americans were looking for work in July than in June, while the number of nonfarm jobs added by American employers slipped to 113,000 on a seasonally adjusted basis — not enough to keep pace with the natural growth of the population.

John Lonski, chief economist with Moody’s Investor Service, is one of a growing number of economists who say that many factors are converging to increase the risk of a recession.

“The precarious condition of housing, the fact that recent Fed rate hikes have not been fully felt by the economy, and the possibility of even higher energy prices — this could add up to a situation which slows U.S. growth beyond what is currently anticipated,” he said.


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