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FOMC Rate Decision − May 2007
Thu, May 10 2007, 08:29 GMT
by John Silvia
Fed Outlook: Growth Slowed But Inflation Concerns Remain
Growth outlook remains positive with “a moderate pace over coming quarters” as the housing adjustment continues. Meanwhile inflation, while moderating slightly, remains above the Fed’s target zone, as “core inflation remains somewhat elevated.” Our outlook remains for the Fed to stay on hold through the rest of the year.
ISM Above Breakeven
- Economic growth appears to remain on its sub-par pace despite the low level of jobless claims and the 50+ level of the Institute for Supply Management (ISM) index.
- Historically, the Fed has waited for the ISM index to decline below 50 for several months before easing. Any movement is likely to occur after the mid-year policy statement.
Inflation Data Still Define Limit Of Policy Flexibility
- Core personal consumption prices remain above the Fed’s perceived target ceiling although recent months have evidenced some slowdown.
- Yield curve limitations on credit remain in place. The inverted yield curve puts downward pressure on net interest margins and is a significant constraint on credit availability thru banks.
Published on Thu, May 10 2007, 08:31 GMT
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.
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