SWEET THREADS, CHAIRMAN:

Federal Reserve holds rates as inflation pressures 'moderate' (Stephen Foley, 29 June 2007, Independent)

The United States Federal Reserve kept interest rates on hold last night and rowed back from suggestions it could raise the rate to dampen inflation.

Its description of "moderating" inflationary pressures was new and, although the central bank said it wasn't yet convinced the trend was sustainable, the stock market took that to mean that rates will stay where they are for some months yet. US rates have now been on hold at 5.25 per cent for a year. "Readings on core inflation have improved modestly in recent months," the Fed's open markets committee said in its statement.

Hans Christian Andersen would recognize the process whereby the Fed is periodically forced to acknowledge that it's been fighting an inflation that does not exist and the rest of us pretend it's moderated.

Posted by Orrin Judd at June 28, 2007 8:04 PM