The Fed Leaves Key Interest Rate Unchanged

by August 6, 2008 • 0 comments

Yesterday, at the Federal Reserve’s regularly scheduled meeting, it was decided to leave the key interest rate at 2%.  Economists had predicted a likelihood of the Fed raising the rate to help ward off inflation and slow economic growth.

This was the second scheduled meeting that the Fed chose to leave the key interest rate the same.  Over the last 11 months, the Fed has lowered the key rate seven times.  Given the economies fragile state with the weak labor and financial markets, it would seem that no move was the best move at this point.

In anticipation of the meeting yesterday, the markets rallied, up around 225 points before the Fed’s announcement.  With the services sector falling less than expected and oil futures dropping to around $118 a barrel, the Dow had gained 330 points by the end of the day yesterday.

The S&P 500 rose just over 2.87% or 35.87 points and NASDAQ rose 64.27 points or 2.81%.

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