Thursday, February 22, 2007

Forex News: 22.02.2007 All FOMC meeting participants are concerned about the outlook for inflation

On Wednesday February 21 FRS published FOMC meeting minutes of January 31, when the participants unanimously voted to keep interest rate unchanged at 5.25%.

The Committee says that the economic growth expanded in the forth quarter of 2006, but was uneven in economic sectors. This reflected the rise or personal income and spending as well as labor market improvement. The construction market is frozen but there are signs of stabilization with the rise of demand for residential construction.

Though oil prices influenced the consumer price inflation in December, core inflation slowed down in recent months. Employment largely improved, nonfarm payrolls rose considerably. Nevertheless, employment declined in manufacturing and construction sectors. The unemployment rate was at the same level, 4.5%.

It is noted in the report that all Committee participants expressed concern about inflation outlook, but considered that positive data on core inflation suggest further slowing down in the nearest future. Nevertheless, the Committee participants do not think that inflation downtrend is confirmed.

Having discussed economic development and the outlook for inflation, the Committee voted to keep the interest rate unchanged, defining, however, that “inflation risks remain”.”The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information”, the Committee says.


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