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Full story of FOMC here:
http://www.marketwatch.com/news/story/fed-hold-based-firmer-growth/story.aspx?guid=%7B24A1B5AF%2D8DE1%2D4FEC%2DAD6D%2D74F3E08CBF4C%7D
your take on it, billywows?
THE FED
Text of FOMC statement
By MarketWatch
Last Update: 2:45 PM ET Jan 31, 2007
Wednesday January 31, 3:27 AM
The Federal Reserve opened a two-day monetary policy meeting that was expected to acknowledge stronger economic conditions, diminishing hopes for a rate cut soon.
The Federal Open Market Committee was widely expected to keep its base rate at 5.25 percent, where it has been since August, when the panel halted a series of 17 consecutive quarter-point increases to stem inflation.
The committee was expected to reiterate concerns about inflation risks, say economists, and may also tweak the language in its statement that highlight the surprising strength of recent economic data.
As a result, any hope for a rate cut to stimulate the economy -- the subject of discussion just weeks earlier -- has become slim.
"The risk in the US is that we are dealing with a quite tight labor market," said Peter Hooper, global economist at Deutsche Bank.
Hooper had earlier expected a series of rate cuts by the Fed in 2007, but said an easing of labor conditions would be needed to allow the Fed to cut rates.
"So far that hasn't been happening," he said.
Hooper said he still anticipates a rate cut later this year but on Wednesday expects "no substantive change" in the FOMC's message.
"With risks balanced toward inflation, the next move is more likely to be up than down, in their view," he said.
"They will be looking, as we are, for an easing of labor pressures ahead."
Joel Naroff at Naroff Economic Advisors said a series of strong economic indicators on job creation, housing and consumer confidence has the Fed shifting its stand.
"With the job market remaining solid, there is little reason to think households will stop spending," he said.
"The Fed knows this as the FOMC starts its meeting and we likely conclude that the economy is in good shape and labor market tightness ... could continue to put pressure on prices.
"Thus, I expect the Fed to remain on hold through the spring."
Others point out that higher yields in the bond market suggest stronger growth ahead.
"While the markets are still pricing a decrease in interest rates for the year, they have pushed it back to the end of the year," said Eugenio Aleman, economist at Wells Fargo.
"In fact, there are some that have started to speculate that the Federal Reserve may actually have to increase interest rates rather than lower them.
"And this is an important change in perceptions after the 'lower-rate-recession-mongering' period we have gone through during 2006."
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Fed may acknowledge stronger economy
The Federal Reserve opened a two-day monetary policy meeting that was expected to acknowledge stronger economic conditions, diminishing hopes for a rate cut soon.
The Federal Open Market Committee was widely expected to keep its base rate at 5.25 percent, where it has been since August, when the panel halted a series of 17 consecutive quarter-point increases to stem inflation.
The committee was expected to reiterate concerns about inflation risks, say economists, and may also tweak the language in its statement that highlight the surprising strength of recent economic data.
As a result, any hope for a rate cut to stimulate the economy -- the subject of discussion just weeks earlier -- has become slim.
"The risk in the US is that we are dealing with a quite tight labor market," said Peter Hooper, global economist at Deutsche Bank.
Hooper had earlier expected a series of rate cuts by the Fed in 2007, but said an easing of labor conditions would be needed to allow the Fed to cut rates.
"So far that hasn't been happening," he said.
Hooper said he still anticipates a rate cut later this year but on Wednesday expects "no substantive change" in the FOMC's message.
"With risks balanced toward inflation, the next move is more likely to be up than down, in their view," he said.
"They will be looking, as we are, for an easing of labor pressures ahead."
Joel Naroff at Naroff Economic Advisors said a series of strong economic indicators on job creation, housing and consumer confidence has the Fed shifting its stand.
"With the job market remaining solid, there is little reason to think households will stop spending," he said.
"The Fed knows this as the FOMC starts its meeting and we likely conclude that the economy is in good shape and labor market tightness ... could continue to put pressure on prices.
"Thus, I expect the Fed to remain on hold through the spring."
Others point out that higher yields in the bond market suggest stronger growth ahead.
"While the markets are still pricing a decrease in interest rates for the year, they have pushed it back to the end of the year," said Eugenio Aleman, economist at Wells Fargo.
"In fact, there are some that have started to speculate that the Federal Reserve may actually have to increase interest rates rather than lower them.
"And this is an important change in perceptions after the 'lower-rate-recession-mongering' period we have gone through during 2006."
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I'm expecting it to maintain its rate than to cut actually ... :D
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For info, next FOMC meeting on 31st Jan .... Dun bet on a rate cut till after the expected correction. :P