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FOMC Announces Interest Rates Will Remain Low

Thursday, November 17, 2011 3:43pm
three-dimensional graph heading downwards
The Federal Reserve Board and the Federal Open Market Committee (FOMC) met on November 1-2 to review the economic trends of 2011’s third quarter and to discuss future economic projections.
 
The FOMC press release revealed that economic growth rose slightly between this quarter and last, suggesting the country had shrugged off some of the negative factors weighing the economy down.
 
It was also mentioned that despite the fact that unemployment remains high and the housing market is still in a slump, household spending has increased and business investments have been on the rise.
 
But the FOMC is hoping to bolster the economy further in the upcoming quarter. As a result, employment and price stability have been pushed to the forefront of the FOMC’s attention.
 
The FOMC expects the unemployment rate to decline in the upcoming years, and come closer to levels on par with their long-term goal—around five percent.
 
They anticipate that inflation rates will settle at levels at or below the FOMC’s long-term goal, but it was announced interest rates would receive their close attention and monitoring.
 
In a conscious attempt to keep inflation rates low, strengthen personal and commercial investment ability and, ultimately, improve the job market, the FOMC said they will keep the federal funds rate at low levels.
 
The federal funds rate is the rate at which banks receive money from the government, and have a direct impact on loans’ interest rates for the public.
 
The target the FOMC seeks to keep federal fund rates at lies somewhere between 0 and 1/4 percent, and rates are expected to remain at these extremely low levels until the middle of 2013.

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