Fed: Pace of Recovery 'More Modest' Than Expected

The Federal Open Market Committee (FOMC) of the Federal Reserve voted (8/10) to maintain interest rates at their current level, noting that the pace of recovery in output and employment has slowed in recent months.

In its statement the Fed said that bank lending has continued to contract and the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

The Fed added that that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.

As usual Thomas M. Hoenig, of the Federal Reserve Bank of Kansas City, voted against the policy statement saying that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.

To read the Fed’s press release in its entirety, click here.