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The Federal Reserve Statement Simplified (September 21, 2010)

The Federal Open Market Committee met today, and as most observers expected, it voted 9-to-1 to leave the Fed Funds Rate unchanged.

The press release that was issued by the FOMC noted the slower pace of economic recovery. Even though household spending is increasing, it is hampered by other factors, most notably the unemployment situation, tight credit, and the housing market.

Not a whole lot of optimism coming from the Fed but it does expect growth that will be “modest in the near-term”. 

Some would argue that the recession is over, and that growth has resumed, but at a very slow pace.  I think that is a hard argument to make for many small businesses.

On the positive side, the Fed did make mention of strengths in the economy:

1. Growth is continuing on a national level
2. Inflation levels remain very low
3. Business spending is rising

No surprise that the Fed re-stated its intention to hold the Fed Funds Rate near zero percent “for an extended period”.

Since there were no surprises, the mortgage market’s reaction to the release has been neutral. Mortgage rates in Virginia seem to be unchanged as of today.

The FOMC’s next meeting is scheduled for November 2-3, 2010.